Market Commentary: Markets Gap Up On Opening, Volume Falling

Written by Gary

Opening Market Commentary For 10-10-2013

Normally the premarket SPY being up +0.96% would be a good sign to jump in at the opening, but in today’s markets anything can happen and can not be trusted. This morning was an exception especially in light of first time unemployment rising to 374 K, the highest level since March.

Markets gaped up at the opening bell on rumors and other innuendos that the Washington political factions are working on a deal. Investors unsure of market progress as volume falls and the NASDAQ 100 is off -1.31%, a really bad sign of things to come.

Today’s opening is not a real surprise as it could be viewed as a corrective action in bouncing off the support (SP500 @1654 and an upwards trend line) and yesterday decent being too much for Mr. Market. Looking at it as a bullish move is not a valid one considering the large and significant gap left this morning and continuing US financial issues.

The RRR** has been very narrow at the opening bell for months and this trend of low volume and narrow trading sessions makes any predictions of session movements nearly impossible, thus making trading futile and mostly unprofitable. Having said that, today’s rise may present a nice trade using inverse ETF’s later on today.

Overnight positions would have had the most spread, but what a gamble to take. Yesterday’s closing suggested that we would see another down day, but that didn’t happen, quiet the opposite.

Traders also 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 the Washington mess progresses without any solution you can expect swings in either direction.

I also have continuing issues with some pundits, writing continually, that there are good setups for day trading which has only been true for swing trading, but the Best Stock Market Indicator Ever: Confirms “Untradeable”. However there is a wedge between perception and reality that has been going on for some time now where the reality doesn’t match the bull run. Maybe we have seen the top – but I wouldn’t count it as long as the Fed continues to hand out ‘Free Ice Cream”!

The problem facing traders is that the trading range, which has been so narrow lately, 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. 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 14987 up 182 or 1.22%.

The SP500 is at 1677 up 21 or 1.27%.

SPY is at 167.72 up 2 or 1.27%.

The $RUT is at 1060 up 16 or 1.57%.

NASDAQ is at 3731 up 53 or 1.44%.

NASDAQ 100 is at 3185 down 44 or -1.35%. (BIG RED FLAG)

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

How Oil Really Gets Priced

WTI oil is trading between 101.20 and 102.26 today. The session bias is positive and is currently trading up at 102.01.

Brent Crude is trading between 108.86 and 110.77 today. The session bias is positive and is currently trading up at 110.61.

Gold fell from 1311.82 earlier to 1294.54 and is currently trading up at 1301.70.

Here’s why copper has lost its indicator role

Dr. Copper is at 3.231 rising from 3.216 earlier.

The US dollar is trading between 80.41 and 80.68 and is currently trading up at 80.62, the bias is currently positive.

** RRR = Risk Reward Ratio

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Written by Gary