Opening Market Commentary For 05-03-2013
Sometimes you guess wrong as I thought this morning would be down. This morning premarket SPY was up +0.75% which I believe is the highest starting point this year. Yesterday I mentioned that none of the traders in the office were trading, or more accurately over night holding, just because of this wild volatility.
Markets opened up, way up, where the small caps were surging above 1% in the opening minutes followed by the DOW at +0.93%. The one gray rain cloud over this parade is that volume was not up in comparison. By the 15 minute mark the volume had fallen considerably and several heavy spurts of profit taking. By 10 am the markets had generally tested the morning highs and were poised to melt up higher but the lack of higher volume to equate to the higher averages does not bode well for the continuation of this market rise and has the smell of a fake-out rather than a breakout.
The markets jumped higher this morning primarily because of the better than expected change in US private payrolls coming in at 176K while expecting 150K. Unfortunately, the US underemployment rate (U6) rose to 13.9% from 13.8% and that tells me that the US economy is still not all that rosy and this mornings rise was a bit too much.
The 10 am the US ISM services came in at 53.1 Vs. the 54.0 EXPECTED. The factory orders fell 4.0% Vs. the -2.9% expected and the markets didn’t react.
The RRR** has been narrow at the opening bell for the past several months, over a year actually, and it has been all this way all week, like last week (and the week before it). This continuing trend makes predictions of session movements nearly impossible making trading futile and unprofitable. As of right now, it ‘appears’ to be too late to jump in to catch the highs, safely anyway. As for shorting it may be too early to start shorting, but I feel you will not have to wait much longer, especially after today.
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 second quarter, unfortunately a lot of guessing remains. Correctly ‘guessing’, of course, is the tricky part of the successful trading equation lately. 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 87% up From 84% and Secondaries Confirm “Tradable” This might be true, but still above 75% where I think it should be! Hard to believe and challenging to deal with considering current events. 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 10:30 is at 15006 up 174 or 1.17%.
The SP500 is at 1618 up 21 or 1.30%.
SPY is at 161.84 up 2 or 1.30%.
The $RUT is at 959.34 up 19 or 2.08%.
NASDAQ is at 3387 up 46 or 1.39%.
NASDAQ 100 is at 2950 up 39 or 1.33%. (A lot of analysts are currently watching the 100 for a heads and shoulder formation.)
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is bullish.
This morning gold prices pulled back while WTI crude-oil futures surged 1.45 after better-than-expected U.S. jobs data but pulled back by the 9:30 opening.
WTI oil is trading between 93.05 and 95.66 today. The session bias is bullish and is currently trading up at 95.51.
Brent crude is trading between 101.81 and 104.65 today. The session bias is bullish and is currently trading up at 104.53.
Gold fell from 1487.39 earlier to 1457.57 and is currently trading down at 1471.35.
Dr. Copper is at 3.278 up from 3.118 earlier.
The US dollar is trading between 81.93 and 82.58 and is currently trading down at 82.02, 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