Propping Continues: Dave's Daily

Dave's Daily

By Dave Fry, founder and publisher of ETF Digest and author of the best-selling book Create Your Own ETF Hedge Fund.

April 13, 2010

PROPPING CONTINUES

These "prop jobs" are becoming a daily "in your face" activity plain for all to see; but more importantly, we're basically long so why complain?

Alcoa's earnings were a miss. That dragged down global equities fearful that economic growth via demand for materials would suffer. But, Alcoa always reports funky earnings numbers replete with write-downs and all manner of unique quarterly mumbo-jumbo.

For the most part, markets marked time waiting for results from Intel, Linear Tech and CSX Corp among others. After the bell, earnings from all three beat estimates handily.  

Again, volume was light perhaps in advance of the first round of earnings news as investors wait to commit.  Breadth was basically flat.

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.

Per Investopedia:  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.

Per Investopedia: 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.

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