Opening Market Commentary For 04-01-2013
Premarkets began flat early this morning in light of light news. By 9:15 the futures were off, but still flat mostly because of the US Markit Purchasing Manager Index showing a downward revision to 54.6 from an initial print of 54.9.
The markets opened flat, recovered and the SP500 and the DOW crept up to new highs and then reversed falling 0.50% at the 10 am financial reporting. The small caps became negative right out of the opening and have fallen a few more percentages that the large caps.
Note: I will be out of the office all day due to meetings.
Markets opened mixed, flat and on low volume as everyone waited for the 10 am reporting of the US Construction Spending and the US ISM Manufacturing numbers. The US Construction came in at 1.2% while expecting 1.0%. The ISM Manufacturing came in at 51.3 while analysts were expecting 54.2.
Dailyfx reported “ISM Manufacturing: Gauge for New Orders narrowed to 51.4, lowest since December, while inventories contracted for the first time this year.”
Leavitt says it best this morning.
“. . .nothing happened overnight to change anything. This is somewhat of an important week because all the indexes (except $RUT & $SML) broke out of their consolidation patterns and closed at new highs.
Within a range, it doesn’t matter if the market moves up or down and lacks conviction behind the moves.
But when a breakout attempt is made, we want to see volume pick up, enthusiasm pick up and most of all, some follow through to separate itself from the range.
With Thursday’s closes, the indexes no longer have the liberty to bounce around, so the pressure is on to prove the moves weren’t a dud. But unfortunately with Europe being closed, the market may decide to do nothing for a day.
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and has continued the trend again today. 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: Unchanged at 88% and Secondaries Confirm “Tradable” This might be true, but challenging to deal with. The trading range is so narrow that way too much 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 10:15 is at 14582 up 4 or 0.03%.
The SP500 is at 1565 down 3.28 or -0.21%.
SPY is at 156.41 down 0.26 or -0.17%.
The $RUT is at 945.13 down 6.41 or -0.69%.
NASDAQ is at 3256 down 11 or -0.34%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been neutral and the current bias is down.
WTI oil is trading between 97.40 and 95.93 today. The session bias is bearish and is currently trading down at 95.98.
Brent crude is trading between 109.10 and 110.00 today. The session bias is bearish and is currently trading down at 109.35.
Gold fell from 1600.10 earlier to 1595.18 and is currently trading sideways at 1597.83.
Dr. Copper is at 3.36 falling from 3.40 earlier.
The US dollar is trading between 83.36 and 82.92 and is currently trading down at 82.92, the bias is currently negative.
** RRR = Risk Reward Ratio
To contact me with questions, comments or constructive criticism is always encouraged and appreciated:
Written by Gary