Major ETFs climbed to three-month highs on hopes of more
assistance from the European Central Bank in dealing with the
"Markets bought into ECB rumors in abundance on information
that there may be wheeling and dealing going on behind closed
doors to address Spain and Italy's stubbornly high borrowing
costs," Andrew Taylor, a market strategist at GFT, wrote in a
SPDR S&P 500
) jumped 0.47%.SPDR Dow Jones Industrial Average (
) rose 0.51%.PowerShares QQQ (
), a basket of the 100 largest nonfinancial stocks on the Nasdaq,
"The 50,000-foot view is that of a market in the midst of a
large base-building pattern in the wake of the December-March
mark-up period," Kevin Marder of Marder Investment Advisors wrote
in a client note. "This basing phase occurs as the individual
investor appears to have given up on equities. In light of a
global growth slowdown, participants favor low-expectation
issues, many of which pay dividends above the yield on
Randy Frederick, managing director of active trading and
derivatives at Charles Schwab, believes the S&P 500 can rally
to a new high by mid-August. The market appears bullish given the
low volatility, relatively high European bond yields and strength
of the S&P 500, he says.
"Despite plenty of large moves in the market in both
directions and no real resolution to the problems in Europe,
volatility continues to remain quite subdued," he wrote in a note
the media. "While the July employment report has likely lowered
the chances of QE3 (a third round of quantitative easing) for
now, and the strong promises in Europe have yet to materialize
into anything of substance, the market remains remarkably
resilient, and optimism seems to be increasing."
Investment advisers say the market is driven by news more so
than fundamentals and expect volatile trading the rest of the
"Sudden, sharp reversals are normal in this environment, and
these reversals severely complicate the picture for short-term
traders working on the two-day to two-week time frames," Waverly
Advisors said in client note this morning. "The only viable
solution for most traders and investors is to focus on
longer-term, bigger-picture setups."
Waverly added: "Our macro view has evolved into three key
themes over the year to date:
"1) The U.S. economy remains poised to outperform, which
should continue to be reflected in U.S. dollar-denominated asset
valuation over the intermediate term on a relative basis (with
the obvious proviso that this will be subject to short-term
tactical forces we saw in the post-European Central
Bank-announcement euro rally.
"2) That China's ability to protect and nurture growth
domestically will have a much less profound impact on the global
economy in the near-term than in prior stimulus periods.
"3) That the final day of reckoning has yet to pass for
Europe, making any euro-denominated asset exposure fraught with
risk unless actively managed. Put simply, China can't save the
world, the European Union can't fix what is broken without
feeling more pain, and the U.S. looks like the least
dysfunctional of the primary wealthy economies (if only by a
Weakness in the dollar against the euro boosted gains in
PowerShares DB U.S.
Dollar Index Bullish (
) shed 0.27%.CurrencyShares Euro Trust (
) rose 0.33%.
IShares MSCI EAFE Index (EFA), tracking developed foreign
markets, vaulted 0.96%.
IShares MSCI Emerging Markets Index (EEM) climbed 0.94%.
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