Markets Melt Up To New Highs On Low Volume

Opening Market Commentary For 02-19-2013

Premarkets were up slightly indicating a gap up for the cash crowd. Not a lot of news out there but when the markets opened up the SP500 melted up to new highs (1526) by 10 am. By 10:15 the averages were melting down and the feeling right now is wonderment as we watch the averages melt up once again. When in the hell is this ‘thing’ going to fall off the cliff?

The RRR** has been narrow at the opening bell for the past several months and has continued the trend again this morning. This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable. As of right now, it is too late to jump in to catch the highs and still may be too early to start shorting.

As long as market volume remains light or the trading range is narrow, one can expect successful, or at least profitable, trading to remain elusive. The RRR** has been wider on some volatile sessions lately and is expected to become more so as 2013 enters the first quarter, but unfortunately a lot of guessing remains. Correctly ‘guessing’, of course, is the tricky part of the successful trading equation. Any trades today will probably end up on the meager side of profitability if you are lucky as most trades have been less than optimal during the past several years.

I also have continuing issues with some pundits, writing almost every day, that there are setups for day trading. Best Stock Market Indicator Ever: Drops to 82% and Secondaries Confirm “Tradable” This may be true enough, but the trading range is so narrow that way too money has to be put on the table just to get back meager gains. Do not fall into the trap of money burning a hole in your pocket, sit tight better days are coming. I keep hoping for increasing volumes to signal improved trading.

Swing trading is also at your own risk for all the reasons mentioned above although guessing overnight trades would have been most profitable over the past year. Again, guessing where the market is going to be tomorrow or next week, at this time anyway, can be a foolish and costly endeavor.

The DOW at 10:30 is at 14030 up 48 or 0.34%.

The SP500 is at 1525 up 6 or 0.39%.

SPY is at 152.77 up 0.67 or 0.44%.

The $RUT is at 928.66 up 5.52 or 0.60%.

NASDAQ is at 3203 up 11 or 0.36%.

The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is neutral to bullish.

How Oil Really Gets Priced

WTI oil is trading between 95.31 and 96.15 this morning. The session bias is neutral and is currently trading down at 95.75.

Gold fell from 1618.00 earlier to 1606.40 and is currently trading down at 1607.27.

Dr. Copper is at 3.67 fell from 3.70 earlier.

The US dollar fell from 80.76 earlier to 80.60 and is currently trading down at 80.62.

** RRR = Risk Reward Ratio

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Written by Gary