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Markets Are Getting Tired: Dave's Daily

Clearly it's hard for markets to consistently produce 3%-5% monthly returns without taking a break. This is what we're now seeing absent--more positive news. Jobless Claims data Thursday should shed some light on conditions as will next week's Employment Report which needs to verify a better trend in conditions. Gallup is projecting an unemployment rate in excess of 9% again although they don't seasonally adjust like the BS BLS does.

We read yesterday some breathless financial commentators remarking that mutual funds showed the first positive fund flows since the previous January. That's a nice assertion, but January is always a time for people to invest for their IRA or 401K and so forth. Surprisingly ETF fund flow data from the previous bullish week showed $1.2 billion in outflows for both equity and bond sectors.

Basically, markets are just getting tired. We've remarked to members regarding weekly DeMark 9 count indicators which normally reflect "trend exhaustion". This is not to say these counts are perfect and may just indicate some sideways movement ahead. And, that's all we may be seeing despite how much liquidity global central banks are feeding bulls.

Meanwhile the SEC's Mary Shapiro said she's worried about HFT ( High Frequency Trading). Worrying isn't a policy. Wake me when you're on to something real.

China reported another decline in manufacturing via an early PMI report there. Europe also reported a PMI below 50 indicating economic contraction. Back in the U.S. the NAR (National Association of Realtors) continues its serial misstatements as the current report showed a 4.75% increase in pending home sales but the previous report was adjusted from a 5% increase to a .05% decrease. How does that happen? Don't they have computers?

Wednesday markets felt a hangover from a poor Dell (DELL) report as we await Hewlett-Packard's (HPQ) report after the close (which missed revenue estimates $30.04 billion vs 30.72 billion expected but was a little higher on "adjusted" earnings). TJX Corp (TJX) matched earnings estimates but Toll Brothers (TOL) missed reporting a small loss versus a small gain. The latter along with the untrustworthy report from the NAR pushed REITs lower (IYR) and Homebuilders (ITB). The lingering uncertainty regarding the Greek situation also pushed banks (KBE) and financials (XLF) lower.

The downside of all this global central bank liquidity is well-seen in energy and precious metals markets. Oil fell a few pennies but remains quite high and gold (GLD) continued to soar. The dollar was down slightly and bonds were stronger. There's a lot of posturing by politicians over who's to blame for recently rising gasoline prices. All politicians and bureaucrats should just look in the mirror for an answer.

Volume was once again ultra-light making it rather easy for HFTs to push things around even as little was accomplished overall Wednesday. Breadth per the WSJ was negative.

 

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