EU-US Back-Scratching Society: Dave's Daily
The worries over eurozone troubles were absent Wednesday as it was assumed the
U.S. would back any rescue
of troubled sovereign debt issues. This was well-hyped but then later
. No matter, bulls were not about to be slowed by inconvenient facts shifting instead to better economic data. As the Fed Beige Book reported modest economic growth was continuing and the ADP Jobs Report showed 93K job growth in the services sector. Also Labor Productivity rose 2.3% but ISM factory index was lower.
Oh, and just in case you missed it, there was another round of
Wednesday to keep markets and FOFs (Friends of the Fed) well-lubed. In this operation, many of the bonds purchased from the Primary Dealers were from the auction last week so the shell game continues. Further, how much more can the Fed print to shore up the EU?
We had four days of stock market declines and had gotten short-term oversold so a bounce wasn't surprising. Let's not forget this is the best month of the year and those daring to be short were squeezed. Finally, let's remember what bullish month and season we're in now.
Volume was higher than previous market melt-ups and breadth was quite positive but not quite a 90/10 day by current data.
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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.
Continue to Concluding Remarks
Was Wednesday's action just a short-term oversold rally, or does it have some seasonal staying power? It's hard to know but this eurozone nonsense is getting pretty annoying. First it's fixed, then not, then repeat again and again. Enough already!
The Fed is pulling out all the stops to push prices of everything higher. In the end higher prices is something you probably won't like unless it offers you a job. Wall Street likes the higher prices and Bernanke & Co have given new meaning to the maxim: "Don't fight the Fed."
Thursday Jobless Claims data will be reported along with Pending Home Sales.
I'll be off to Boston tomorrow but will post in the evening. And, with this storm pummeling New England I better get this posted now.
Let's see what happens. You can follow our pithy comments on
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Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, MDY, IWM, TZA, QQQQ, XLI, TBF, GLD, DBC, DBA, EFA, EEM, EWA, EWJ, EWY, EWC, EWZ, RSX, EPI & FXI.
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. More detailed information, including actionable alerts, are available to subscribers at
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
Dave Fry is founder and publisher of
, Dave's Daily blog and the best-selling book author of
Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management
, published by Wiley Finance in 2008. A detailed bio is here:
Dave Fry.