Where to begin...........Especially after the Momentum Change indicators for all the major indexes flipped to Buy on Friday and Tuesday. But as I have repeated numerous times, I try to place these directives into context. Let me say that I was busy last evening and this morning, looking at new recommendations and potential stop loss prices. I was busy making notes and getting ready for the open when I glanced at the pre-market pricing. Whoa!
So I held off making any new trades and wanted to wait until about 10:30 to see how the market behaved. It is now 12:30 and the Dow is off 200 points. Holy Crashing Market, Batman!. Probably not a good time to be talking about Bullish Market Momentum.
The big story this morning, (after the news yesterday that the Chicago PMI printed its worst performance since the Lehman crash, and then Confidence Indicator printed a big decline in consumer confidence. Big surprise there!) But the news this morning that the ADP report on NFP (Non-Farm Payrolls) missed the consensus of 175,000 new jobs, printing 38,000, was a big surprise. Now the WSISI is busy re-writing the their estimates for the BLS report on Friday. New consensus forming around 100,000 for the Friday report.
Shortly after the ADP report, the ISM was reported to have fallen to 53.5, missing consensus of 57.1 and a previous 60.4. This is the lowest print since September, 2009. And while I have been typing, the New Vehicle Sales report has just been released, showing a decline of 1.6% from the previous month. The real surprise is the continuing production of autos, while sales decline. GM has now placed more cars for sale on their dealer lots than at any other time in history. They report 584,000 vehicles in inventory at dealers, 177,000 than the same month last year. Get ready for a Summer of "can't refuse" new auto sales pitches.
The noise in the financial press is growing louder.........QE3 must be on its way or the world as we know it will end. It should be remembered that the NFP numbers were what pushed the Fed last year to mount QE2. That and the declining Dow. But I would suspect the Fed will find it a hard sell to continue a strategy that has not convinced anyone of its success.
Oil is off nearly 2% this afternoon, trading at 100.73. Brent is also lower, trading at 115.10 Gold is up 9.60 at 1545.50 (futures are racing ahead), and Silver is off 0.50% at 37.77. The soft commodities are mixed. The Euro continues to rally, up a couple of ticks at 1.44 and the Dollar is lower a few ticks at 74.54. I am disappointed that no one offered to take the other side of my bet on the 10 year Note. As I expected, the Note has rallied strongly, breaking the magic 3%, trading at 2.96%. The Bond is also higher, trading at 4.15%.
This is turning into an exciting week of trading.. just disappointed that I am not in it. Of course, if I was in it, I would have been on the wrong side. I am reminded again that it is imperative that all trading strategies be implemented with an eye on context. I still like the long side here, and would like to find a place to enter the market again. Lets see what tomorrow brings. I doubt that the indicators can switch back to the Sell side with out giving us a chance to trade the long side. The again, it is the job of a Bear Market to fool as many people as possible, both longs and shorts, so that they all get a taste of Whipsaw Goulash before beginning a new trend.
Best To Your Trading!
Bill
Hey Bill, I hear ya. What a disappointing day. My own "buying" indicator started going positive last week and I bought at the gap fill yesteday. Today was definitely one of those days you can't plan for except that I only initiated a small bullish position because the downside risks are elevated right now. I expect some kind of bounce tomorrow. I'll get out then and wait to go short.
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