Closing Market Commentary For 02-26-2013
Markets closed without much fanfare and low volume. The SP500 traded in a narrow range of 14 points and mostly sideways with a very slight bullish tinge to it.
Everything ended up in the green, barely so on volume low enough to wonder why the HFT computers didn’t push the averages higher. Tomorrow is another day where I suppose Wall Street will blissfully ignore the siren song of the EZ demise in the making.
Every day the HFT algo computers play a significant part in the trading session and it is usually in a negative slant not designed for the benefit of the cash crowd.
The Huge Shift In Market Structure That Occurred Yesterday
Equity markets relatively collapsed intraday yesterday given the recent lack of volatility with the range around four times larger than the three-month average and volume at its highest in that period.
While that is significant of itself, as the S&P broke its uptrend, Nanex has found a much more serious shift in the market structure that occurred yesterday. Soon after the open on the US day session, market-making HFTs surged their quote-stuffing efforts to the highest level in months.
Whether this was intended to artificially inflate orders to enable institutional sell-orders to be crossed with falsely hopeful retail orders is unclear but given the order flow and direction of trade, it seems something significant changed yesterday.
The RRR** has been narrow at the opening bell for the past several months but has improved greatly over the past several sessions. If this continues we will have some wiggle room for quick trades in the coming days. However, if the continuing trend of low volume persists, it will make 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, if in fact we have already been there, and still may be too early to start shorting if this is a bear trap, be patient.
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: Rises to 85% 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 4:00 is at 13900 up 116 or 0.84%.
The SP500 is at 1497 up 9 or 0.61%.
SPY is at 149.69 up 0.69 or 0.46%.
The $RUT is at 900.05 up 4.21 or 0.47%.
NASDAQ is at 3129 up 13.40 or 0.43%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been mixed and the current bias is sideways.
WTI oil is trading between 91.75 and 94.40 this morning. The session bias has turned bearish and is currently trading sideways at 92.65.
Gold rose from 1575.00 earlier to 1619.29 and is currently trading up at 1613.95.
Dr. Copper is at 3.57 rising from 3.51 earlier.
The US dollar rose from 81.20 earlier to 82.02 and is currently trading sideways at 81.89.
The 500 at the close.
The DOW at the close.
** RRR = Risk Reward Ratio
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Written by Gary
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