By David Fry (
ETF Digest
):
It's not like words fail me, it's that volume and waiting do. I
didn't post yesterday, as volume on much watched [[SPY]] was only
(cough) 65M shares. That's even less than a half-day holiday-like
trading. Markets followed by doing little. What's the point of even
discussing it? As long as economic data dominates without market
reaction, it's hard to write much. I may continue light posting
until Friday if this persists.
All eyes are glued to whatever hints develop before Jackson Hole
and events that follow in rapid fire succession in September.
Traders (wish I had done the same) have taken the last two weeks of
August off. That in itself isn't unusual, but this lack of action
is extreme. Clearly, those less fortunate junior traders have been
left in foxholes to defend the market status quo. Both bulls and
bears are essentially sidelined.
The Fed's oracle, Hilsenrath, is awaiting orders and targeted
leaked information to assuage investors, causing algos to jump or
not. Early on it was noted the ECB's Mario Draghi would be making
an appearance, and might have been the star of the Jackson Hole
show. But today he backed out. Some have rationalized this to mean
he either didn't want to steal the limelight from Bernanke, or he
had no ability to confirm previous statements to "defend the euro
at all costs" and etc. Perhaps this might mean Bernanke will reveal
new actions in his speech on Friday. If he has the authority to
implement another round of QE, he must have gotten votes to do so
via a conference call with other voting Fed governors. But I
speculate.
Spain's GDP shrunk once again to -.4%, which seemed generous
given the news backdrop. The Catalan province "demanded" a €5
billion bailout "without" any conditions. (Beggars are now
choosers.)
The Basel Group is now under direct ECB pressure to relax new
liquidity rules for banks, which some might surmise would allow for
additional misbehavior.
Not to be left out, Japan is lowering its GDP estimates, but
can't really find a firm number to assign to it. Let's just say
things aren't good.
In the U.S., Consumer Confidence imploded (60.6 vs. 65.8
expected, and prior 65.9), or a 9 month low. This was quite
stunning, and may be the result of rising gas prices and ongoing
joblessness. You wouldn't have known this by the Consumer
Discretionary sector (
XLY
), which rallied on the news. This reflects the "bad news is good"
theme for QE pimps. Bulls liked that home prices rose .9%, or the
same as in June, although it seems to me this is the season for
home buying. But even Shiller commented that improvement was nice,
but there wasn't a rush to buy. The Richmond Fed Index was better,
but still weak at -9.
(click image to enlarge)
Wednesday will feature U.S. GDP data, Corporate Profits and
Pending Home Sales. This is an intense week for economic data,
although the featured player remains the Bernank.
The dollar (
UUP
) was weak, while gold (
GLD
) and silver (
SLV
) were higher. Oil (
USO
) was only slightly higher, keeping commodity tracking ETF (DBC)
only slightly better on the day. Bonds (IEF) once again rose on the
weak overall economic data.
Stocks limped along throughout the day Tuesday, closing mostly
unchanged. Volume was once again ultra-light and breadth per the
WSJ was mixed overall.
(click image to enlarge)
Continue to U.S. Sector, Stocks & Bond ETFs
Continue to Currency & Commodity Market ETFs
Continue to Overseas Sectors & ETFs
The
NYMO
is a market breadth indicator that is based on the difference
between the number of advancing and declining issues on the NYSE.
When readings are +60/-60, markets are extended short-term.
The
McClellan Summation Index
is a long-term version of the McClellan Oscillator. It is a market
breadth indicator, and interpretation is similar to that of the
McClellan Oscillator, except that it is more suited to major
trends. I believe readings of +1000/-1000 reveal markets as much
extended.
The
VIX
is a widely used measure of market risk, and is often referred to
as the "investor fear gauge." Our own interpretation is highlighted
in the chart above. The VIX measures the level of put option
activity over a 30-day period. Greater buying of put options
(protection) causes the index to rise.
As you may recall, I did post a weekly DeMark 9 setup for the
VIX last week. That was the low for now, but markets are only
moving sideways while the VIX itself is higher. Investors must no
doubt be buying some protection against a poor Bernanke result.
Disclaimer:
The ETF Digest maintains active ETF trading portfolio and a wide
selection of ETFs away from portfolios in an independent listing.
Current "trading" positions in active portfolios if any are
embedded within charts: Lazy & Hedged Lazy Portfolios maintain
the follow positions: VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI,
DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, & EWU.
The charts and comments are only the author's view of market
activity and aren't recommendations to buy or sell any security.
Market sectors and related ETFs are selected based on his opinion
as to their importance in providing the viewer a comprehensive
summary of market conditions for the featured period. Chart
annotations aren't predictive of any future market action, rather
they only demonstrate the author's opinion as to a range of
possibilities going forward.
Disclosure:
I have no positions in any stocks mentioned, and no plans to
initiate any positions within the next 72 hours. I wrote this
article myself, and it expresses my own opinions. I am not
receiving compensation for it. I have no business relationship with
any company whose stock is mentioned in this article.
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