Volume Moderate As New Historical Highs Are Made

Opening Market Commentary For 07-18-2013

If you like gambling, this is the market casino for you. The futures eased up to the top of the SP500 futures, which coincides with the 500’s historical high, and backed off. The premarket was not overly active, thus not gleaning any clues to what Mr. Market might do today.

The markets opened higher as expected and by 10 am the SP500 made new highs of a few points (2.51) and the DOW also made a new historical high. The question now are these new highs going to remain at the close?

It is like a wound up spring getting tighter and tighter – when is it going to snap? Although the buy remains around 60% and the sell indicators are about 28%, the pull back when it comes will reverse these numbers in minutes.

The RRR** was narrow at the opening bell today. With the exception of a few volatile days, it has been like this for the past several months, over a year actually. The continuing trend of low volume and narrow trading sessions makes predictions of session movements nearly impossible, thus making trading futile and unprofitable.

As of right now, it is too late to jump in to catch the highs, safely anyway. If you are already long you should have your finger on the sell button, because when a reversal comes it will be quick and decisive. Traders need to be especially cautious how close you set your stops as we have seen lately several corrections that unnecessarily wiped out a lot of investment profits. As for shorting, it still may be too early to start picking out your best candidates, but I urge you to be cautious in hedging your bets.

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. 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 continually, that there are good setups for day trading. Best Stock Market Indicator Ever: At 92% Rises From 85% Last Week and Secondaries Confirm “Tradable” from Negative. This might be true, but still above ~60% where I think it should be! Hard to believe and challenging to deal with considering ‘not so good’ current events.

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.

The trading range has been 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 15565 up 97 or 0.63%.

The SP500 is at 1691 up 11 or 0.63%.

SPY is at 169.07 up 1 or 0.67%.

The $RUT is at 1051 up 8 or 0.78%.

NASDAQ is at 3620 up 10 or 0.28%.

NASDAQ 100 is at 3087 up 2 or 0.06%.

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

How Oil Really Gets Priced

WTI oil is trading between 105.93 and 107.41 today. The session bias is bullish and is currently trading up at 107.23.

More Widening For The Brent/WTI Spread ahead?

Brent crude is trading between 108.04 and 108.68 today. The session bias is bullish and is currently trading down at 108.58.

Gold rose from 1273.95 earlier to 1287.56 and is currently trading down at 1281.75.

Here’s why copper has lost its indicator role

Dr. Copper is at 3.116 fell from 3.137 earlier.

The US dollar is trading between 82.75 and 83.13 and is currently trading up at 83.09, the bias is currently bullish.

** RRR = Risk Reward Ratio

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Written by Gary