Opening Market Commentary For 07-12-2013
Premarkets started out this morning above yesterday’s closing numbers but slowly tapered down as the opening bell approached. The US Producer Price Index Ex Food & Energy (MoM – Jun ) rose to 0.2 while 0.1 was expected.
Markets opened higher (+0.04%) but remained mixed with anemic volume until the University of Michigan Confidence came in at 9:55am. The UMC reported down (rating is high) at 83.9 while expecting 84.7 which in turn didn’t seem to bother the averages and the volume was still easing off.
What is going on here?
One would think that the UMC falling would send the averages downwards, but nothing. Then on the other hand oil, the USD and copper are up and gold is down which should translate into a positive market, but this casino market still can not be relied on to do what ‘should’ happen. But then again, maybe it has something to do with the economy.
With macro fundamental data anything but positive and earnings expectations on a one-way street lower, it makes perfect sense for stocks to be surging on expectations for the future, right? Well, it appears UPS is about to burst that little bubble of faith, hope, and unclarity.
*UPS EXPECTS TO REPORT 2Q EPS $1.13; EST. $1.20; YEAR VIEW CUT
*UPS SEES YEAR ADJ. EPS $4.65-$4.85, SAW $4.80-$5.06, EST. $4.98
Citing “customer preference for lower-yielding shipping solutions” – i.e. everyone is slashing costs still, the real kicker is what is driving their revenue and operating income below expectations – “a slowing US industrial economy.” So much for the ‘recovery’. For now, UPS is -4.2% pre-market.
And if the above news doesn’t depress you with concerns of a deteriorating economy, then reflect on how higher gas prices will effect the already weak market place.
Do not worry, we are told on a daily basis, the rise in crude oil prices is transitory and won’t affect gas prices and implicitly the US consumer’s pocket book (already ravaged by spiking mortgage rates).
Well, sorry to burst that little fantasy but gas prices in the last few days have surged (up 9c in 4 days). In fact today’s jump is the largest in six months and pushes regular close to its all-time high for this time of year.
Arguing not to worry as gas prices are more sensitive to Brent is a non-starter as it is very evident, despite the export of WTI, that gas prices are tracking the higher prices of crude oil and if history is any guide – with regard the lead-lag from crude to wholesale gasoline to retail, gas prices will be at new all-time highs for this time of year within the next month.
The RRR** was again very narrow at the opening bell today and it doesn’t look like it is going to expand any in today’s session. The continuing trend of low volume and narrow trading sessions makes predictions of session movements nearly impossible, thus making trading futile and unprofitable.
Correctly ‘guessing’, of course, is the tricky part of the successful trading equation lately.
There is a wedge between perception and reality that has been going on for some time now where the reality doesn’t match this continued bull run and caution is at an all time high.
The biggest problem with trading is that the range has been so narrow that way too much money has to be put on the table just to get back meager gains.
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. My thoughts are to go back to cash now and wait for the next correction that may be only a couple of weeks away – don’t get greedy. 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 15463 up 2.26 or 0.01%.
The SP500 is at 1673 down 1.49 or -0.09%.
SPY is at 167.25 down 0.18 or -0.10%.
The $RUT is at 1033 up 0.30 or 0.03%.
NASDAQ is at 3580 up 1.75 or 0.05%.
NASDAQ 100 is at 3060 up 0.73 or 0.02%.
The longer trend is up, the past months trend is bullish, the past 5 sessions have been bullish and the current bias is mixed.
WTI oil is trading between 104.37 and 105.85 today. The session bias is negative and is currently trading down at 105.11.
Brent crude is trading between 107.04 and 108.39 today. The session bias is positive and is currently trading down at 108.17.
Gold fell from 1287.08 earlier to 1266.63 and is currently trading up at 1278.65.
Dr. Copper is at 3.154 rising from 3.135 earlier.
The US dollar is trading between 82.77 and 83.39 and is currently trading up at 83.23, the bias is currently positive.
** RRR = Risk Reward Ratio
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Written by Gary