In one of the narrowest ranging trade sessions of the past year, active traders became frustrated at their inability to act. By the end of the day, the S&P 500 (-0.75 -0.10% to 788.42), DJIA (+3.03% to 7555.63), and NASDAQ Composite (-2.69 -0.18% to 1467.97) were all very quiet.
The big sector winner, Consumer Staples (XLP +0.53%) hardly moved, while the big loser by far was Utilities (XLU -1.51%) was down just a bit.
The Toronto Composite (-202.75 -2.42% to 8175.95) did plunge, while the Venture Board (-3.34 -0.36% to 915.82) pulled back a bit.
Earlier in the day today, at 7:34am ET, the European bourses were quiet. The French CAC (-0.33%), the German DAX (+0.24%), and the UK FTSE 100 (-0.11%) had hardly moved.
Today also, the Asia-Pacific equity markets were quiet Australia (+0.92% to 3398.0), Nikkei 225 (+0.31% to 7557.7), Shanghai (+0.78% to 2227.1), Hong Kong (+0.06% to 13023.4), and India’s Sensex BSE 30 (+0.30% to 9042.6) were unremarkable.
Yesterday in NY, there were few groups that made any noise other than Goldminers ($XAU +1.8%) and REITs ($DJR +1.5%).
As for the Cara 100, the winners included CCJ +5.8%, POT +4.6%, VIP +4.2%, TM +4.1%, and CHA +4.0%. The losers were led by TTM -10.4%, BC -8.6%, RIMM -5.7%, and WHR -4.6%.
US Treasuries were soft as yields lifted. The $USB long bond dropped -0.53% to 128.66 and is very weak this morning.
Yesterday, the US Dollar strengthened ($USD +0.47% to 88.00) while the Euro dropped -0.52% to 125.43. Earlier this morning at 7:40am ET, the $USD was at 87.505 and the Euro at 126.86. Crude Oil for April was at 38.60 and was getting a bid. The DJIA futures were at 7548, indicating a modest open.
I’ll cut this short so I can catch the open.
Commentary from the CTAB trader’s conference call:
There is little activity to report from the CTAB trading desk. An extremely narrow trading range seems to have lulled traders to sleep. However, it’s up to us to look for the signs the bull is awakening and the bear retreating. To do that we look at the price and volume data series of the leading big cap stocks.
Did major media outlets warn you prior to the tech wreck of 2000, or the impending residential (and soon to be commercial) real estate bust beginning in 2005? Did they warn you constantly of the potentially devastating effects of too much debt, credit, and exotic derivatives? No, so don't expect the mainstream media to ring a bell when the bottom is in.
As we see the market today, the inability of stocks to shake off bad news is disconcerting. Recall the resiliency of individual stocks at the November lows as bad news was quickly digested during the first 30 minutes of trading, downside gaps were closed and stocks rose for the balance of the session. This is not happening now, requiring tight stops and decreased sizing by market participants. Coupled with the narrow trading ranges, potentially profitable set-ups are very scarce.
In this type of situation, you must let the trade come to you, executing opening transactions at prices reflecting good risk/reward opportunities. If it isn't there, do not press your bets and over trade-simply wait for a better situation. Not an exciting strategy for those of us craving action, but this is a business where prudent risk management is essential for long term success. Our time will come.
What we have seen is that with negative news making headlines daily, people are shunning risk. Instead of placing their hard-earned money in the broad market, the public is turning to gold, a time-tested store of value. So, yesterday, the gold ETF (GLD + 1.46%) quietly crept higher, zeroing in on the July highs.
Our volume analyst, Pascal Willain has made this report available today, which you may find helpful.
http://www.effectivevolume.eu/content/Reports/Gold_0219.pdf
Traders today should be compiling wish-lists of quality stocks, along with the prices they would pay for them. If the market sells off sharply, consider writing out-of-the-money puts as premium levels will expand during a sharp downturn. Plan the trade and trade the plan, as we say.
