Bad Data Sickens Mr. Market: Dave's Daily

This is like the egg salmonella outbreak. In this case, it's tainted home sales data.
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This is sort of like the egg salmonella outbreak except in this case it's tainted data from Home Sales. The drip, drip, drip of negative economic data has little to offset it as earnings are over and even the Fed's

POMO

operation today only caused a small intraday noon rally.

The only good news bulls can take from today is markets are quite oversold on a short-term basis only.

Not that you might care but there was a third Hindenburg Omen confirmation today with rising new highs and new lows. Oh dear, these things take a life of their own and can become self-fulfilling.

To my thinking, a washout is preferable to this ongoing torture but I don't make the rules.

Volume was once again heavier on a down day while breadth was especially negative and perhaps a 10/90 day.

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SPY

: Hindenburg Omens and other data are just other indicators to me. We've noted the weakness from a variety of indicators for some time now and have remained heavily on the sidelines since the spring. Now the question becomes to short or not.

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MDY & IWM

: Looking for better performance elsewhere is like looking at a different quote monitor for different results of the same thing. The correlations are high among sectors varying only by degree.

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QQQQ & AAPL:

Things don't look good technically from a variety of perspectives. But we're also oversold and a bounce could occur at any time.

Continue to U.S. Sectors, Stocks & Bonds

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SMH, IGV, IBB, FDN & IGN

: The ETFs above comprise the basic tech subsectors. There's no sense in going over stocks within each since the above gives all you need to know.

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XLF, KBE & KRE

: You don't need to look at each individual financial institution's stock today to get a sense of things.

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XLB

: The wellsprings of industrial production period.

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XLP

: At support and better relative performance for a defensive sector. Does losing less work for you?

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XLV

: The health care sector is also more defensive but just losing less than higher beta/growth sectors.

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XRT & XLY

: These may be the most overvalued sectors from my emotional perspective anyway.

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IYR & XHB

: It's amazing they're doing as well as they are given the data. As to REITs, it's all about yield.

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XLU

: Utilities are a safer haven for most investors especially now that a lot of the cap and trade stuff is off the table.

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IEF, TLT, TIP, LQD & PFF

: The quest for yield, what there is of it, and safety.

Continue to Currency & Commodity Markets

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$USD/DXY, FXE & FXY

: What to make of paper money and all the troubles surrounding it? Primarily it's a question of confidence and that seems iffy.

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GLD & SLV

: Gold spiked sharply higher suddenly with rumors of more Fed easing and a confession from one Fed governor that conditions are worsening.

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DBC

: Is this becoming fatiguing for you? It is for me.

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$WTIC, XLE & FCG

: The energy complex falls with the ideas of economic contraction and lower demand. Let's see what inventory data is like Wednesday.

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JJC, DBB & XME

: There isn't much to distinguish these sectors from much else.

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DBA, JJG & JO

: Weather markets usually are accompanied by high volatility. La Nina is a factor for all markets.

Continue to Overseas Markets & ETFs

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EFA

: Europeans return to work and they're getting serious about conditions forgotten during their summer fun. Irish stocks closed down 6% Tuesday which may indicate another issue for PIIGS.

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EEM

: Emerging markets are moving down with commodity markets.

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EWJ

: Doing better than most for U.S. investors given the strong yen.

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EWA

: A little higher beta and some unique issues keep EWA down for now.

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EWC

: Another commodity market victim.

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EWZ & RSX

: Both markets are heavily dependent on rising economic growth and commodity prices.

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EPI

: Indian markets react with others lower for a change but do so right at resistance.

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FXI

: China shares were actually higher Tuesday but you wouldn't know it from FXI as that news quickly becomes stale.

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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.

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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.

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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

This is no fun if you're a bull unless you like buying dips. Hindenburg Omens, H&S tops, DeMark Counts, trading range breakdowns and so forth dominate conversations. The big issue remains the economy and the potential for a double-dip. The economic data coming forth suggest this is more likely than not. The Fed may be forced to do something more dramatic in terms of quantitative easing. Even if they do, you better keep your seatbelts fastened.

Wednesday is time for Durable Goods, New Home Sales and Energy Inventories. Maybe bulls can find a shred of good news to take markets higher.

We are short-term oversold so it shouldn't take much to spook the herd zeppelins or not.

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: GLD, DGP, TIP, LQD and EPI.

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

www.etfdigest.com

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Dave Fry is founder and publisher of

ETF Digest

, 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.