Did Today's Open Sucker You In??
Those of you who bought on today's huge gap open are feeling the pain of yet another failed rally try in this bear market. I alerted those that I work closely with about the total NON performance of the NYSE Composite while the 'headline' indices were showing gaudy gains. While the Dow and Nasdaq were up 1.5 to 2%, the NYSE Composite was languishing with a gain of .35 - .40%. That is not the foundation for a solid rally. Internals deteriorated from there and now the market finds itself firmly in the red and sinking (the out of touch Dow notwithstanding).
Until equities rise simply because traders and investors want to own stocks, this market is going nowhere. Today's rally was once again a news driven event. Hurricane Gustav's damage was not nearly as bad as had been feared and the dollar rallied. That drove up overnight futures which ignited short covering at the open. The lack of widespread institutional buying was evident once again simply by watching the NYSE Composite.
Another disturbing sign for equities today is the stabilization of crude oil - yes in spite of all the chirping on CNBC and elsewhere about crude getting 'crushed' today, crude hit its lows EARLY in the session at 105.46, just above the 54 week moving average I wrote about previously which sits at 105.16. Crude oil's weekly cycles are coming into play here. I have also written previously about strong support in the 108 -111 area, and while crude violated that range early in the session, it rebounded right back into it. As of now, crude's price is back over 110. Everyone in the financial media and even the floor traders on the NYMEX are so sure that oil will hit 100, that the odds of that happening are greatly reduced. Markets almost always throw nasty curve balls when the trading masses least expect it. If markets were that easy and predictable to trade, there would be no market because there would be no one to take the losing side of a trade. Think about it.
Do not let the cheerleaders fool you. Crude is headed higher and equities are in for a very rough September.
Until equities rise simply because traders and investors want to own stocks, this market is going nowhere. Today's rally was once again a news driven event. Hurricane Gustav's damage was not nearly as bad as had been feared and the dollar rallied. That drove up overnight futures which ignited short covering at the open. The lack of widespread institutional buying was evident once again simply by watching the NYSE Composite.
Another disturbing sign for equities today is the stabilization of crude oil - yes in spite of all the chirping on CNBC and elsewhere about crude getting 'crushed' today, crude hit its lows EARLY in the session at 105.46, just above the 54 week moving average I wrote about previously which sits at 105.16. Crude oil's weekly cycles are coming into play here. I have also written previously about strong support in the 108 -111 area, and while crude violated that range early in the session, it rebounded right back into it. As of now, crude's price is back over 110. Everyone in the financial media and even the floor traders on the NYMEX are so sure that oil will hit 100, that the odds of that happening are greatly reduced. Markets almost always throw nasty curve balls when the trading masses least expect it. If markets were that easy and predictable to trade, there would be no market because there would be no one to take the losing side of a trade. Think about it.
Do not let the cheerleaders fool you. Crude is headed higher and equities are in for a very rough September.
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