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Beige Book Slows Bulls: Dave's Daily

The stock snapback today was tepid and blunted by the Fed's Beige Book report which showed weakness.
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The stock snapback today was tepid and blunted by the Fed's Beige Book report which showed weakness. But, this should not have surprised given the known news from recent Fed statements. Nevertheless, gains were cut in half in the major indices except the NASDAQ.

The hot commodity markets, at least in grains, cooled with a good crop report from Canada. Other than that most commodity markets continued their measured advance.

Meanwhile, Thursday brings more fun from Jobless Claims and perhaps investors are awaiting this. It's also Rosh Hashanah beginning this evening.

There's not much to add to Wednesday's comments unless we want to discuss more Mark Hurd nonsense. Spare me please.

Volume remains quite light while breadth advanced overall.

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SPY

: The weekly is the same chart from yesterday since nothing much changed.

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MDY & IWM

TheStreet Recommends

: Small Caps show the same chart posted yesterday. Is this just laziness? No, it's convenient!

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QQQQ & AAPL

: It's all Apple, all the time. Is there something else in tech land?

Continue to U.S. Sectors, Stocks & Bonds

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IGV, ORCL, HPQ & SMH

: These were the players so far this week--the good, the bad, the ugly.

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XLB

: Materials are moving higher helped by overall run in base metals and so forth.

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XLF & GS

: It looks like GS will unload their prop desk to KKR. They'll arrange the financing as well probably. Then if you're working on the trading desks do you move to some entity created by KKR with a little help from their friends in high places with registrations? It's hard to imagine them giving it all up but there it is.

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XLY & XRT

: I must say, these two ETFs are quite misleading in their structure. It's not an intuitive arrangement of TGT, WMT and COST types of constituents.

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XLI

: Industrials are propped higher on light volume and hopes things will improve. Ready for GM?

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IYR

: The quest and panic for yield.

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IYT & FDX

: A lift today from FDX where cost cutting measures are taking hold despite destruction of employee morale.

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XLU

: One of the beneficiaries of the retail quest for safety and dividends.

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IEF, TLT & TIP

: Everybody and his cousin is trying to fade (short) bonds but thus far it's been a graveyard for those that try.

Continue to Currency & Commodity Markets

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$USD/DXY

: Uncle Buck is just stuck as the day to day nonsense from the euro zone is pretty ridiculous.

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FXE & FXY

: The BOJ is unhappy with the strong yen and they're really gonna do something about it...really!

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GLD & SLV

: Gold is struggling to breakout above obvious resistance. Silver on the other hand has already made the break but can it hold and go higher? I don't know, I just draw funny little line.

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DBC

: It's really still in the trading range going back over one year. With a 50% weighting in energy as it goes so goes DBC.

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$WTIC, XLE & BP

: Crude oil prices got a lift today and BP was spreading the blame as far as the previous slick extended.

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DBB & JJC

: Base metals are rising and the demand must be coming from Asia.

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XME

: The rise here makes perfect sense given the rise overall in metals and a tame stock market.

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DBA & JJG

: Overall the sector was getting overbought and at resistance. Perhaps the rally is due for a break and Canada's crop report showed the way.

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MOO

: Ag prices higher overall as are stock markets the past week. Why should MOO be left out of the fun?

Continue to Overseas Markets & ETFs

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EFA

: EAFE index is also locked in the trading range as most don't quite know what the true nature of bank financial conditions are.

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EEM

: Again, many EM's within the index really belong in the developed sector.

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EWJ

: Japan market is producing little economic growth like other developed markets. Let's just say it's been boring and unprofitable the past year.

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EWA

: Aussie market rallies with commodities as will Canada, Brazil and Russia.

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EWC

: But, I repeat myself--commodity markets give it a boost.

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EWZ

: Another market stuck in a one year trading range.

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RSX

: Another market with almost a year in a trading range albeit with more volatility.

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EPI

: Finally we break above $24. The major index in India achieved a new high last night.

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FXI & HAO

: Chinese shares faltered overnight as investors fretted about another round of tightening to dampen housing. Meanwhile small caps and the new consumer ETF from GlobalX are outperforming perhaps showing the real strength underneath the market.

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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

Bulls were stopped in their tracks with the release of the Beige Book. Nevertheless, it was a positive day while volume remains ridiculously low. This is just repeating the previous pattern of light volume melt-ups and heavier volume on selloffs.

Equity mutual fund redemptions reached 18 consecutive weeks. Mutual fund equity portfolio managers have little cash on hand (roughly 3%) necessary to meet redemptions. Therefore, there can be little buying power from this group. More troubling will be the lack of buying power from proprietary trading desks on Wall Street as firms shutter their operations.

Tomorrow we get more serious data with Jobless Claims with everyone just tossing out the same estimates week after week. This will allow bulls to seize the tape if conditions warrant.

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: IYR, URE, XLU, TIP, GLD, DGP, SLV, AGQ, DBB, BDD, DBA, DAG, EPI and HAO.

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.