Was the price right or wrong? What did today's Fed statement change if anything? Lots of recycled words it seems. Yes, of course, the machines still ruled the day as Skynet and the Fed got their HFTs in sync at the 2:15 PM appointed hour. However, in the end, it was much ado about nothing.
Precious metals like gold and silver were down early but after the Fed announcement rallied sharply as the dollar was hit. Other commodity markets (oil, base metals and ag) fell with bleak economic outlook.
Bonds again rallied sharply with notions of continued low interest rates and POMO activity.
Was yesterday's sharp rally unjustified? Hey, the tape is the tape but man there wasn't any volume and data really wasn't good with hindsight. Maybe Lennar's profit yesterday came via a purchase and results of an HFT operation in Kansas.
Building permits were up but maybe that just means more inventory to sell.
Volume was much heavier Tuesday with pent-up activity around the Fed announcement while breadth was negative.
SPY
: Nothing surprises with markets. You get the big breakout of the trading range Monday on little volume which is followed by heavy volume selling.
MDY & IWM
: Yes, MDY looks to be breaking the cursed H&S top but the week's not over. Small Caps push at resistance.
QQQQ & AAPL
: Tech overall remains strong with a laggard here and there/
Continue to U.S. Sectors, Stocks & Bonds
SMH, INTC & SNDK
: The weakest tech sector should be the strongest in my opinion.
XLB
: Dragged lower Tuesday by weaker overall commodity prices particularly in energy and base metals.
XLF & KBE
: Have you ever wondered if the Fed follows what the banksters do with their POMO winnings? I wonder if they just put it out there and don't follow it because then they might have to report it. Would you give money to a serial offender who was repeatedly bailed out and not followed what they do with more grants? I thought not.
XLY & DIS
: Sort of a lackadaisical day when so many are touting consumer discretionary because they didn't know the recession ended over a year ago. You can't make this stuff up!
XLI, BA & CAT
: Higher with market leader CAT & BA as the weak dollar pumps the sector. I guess that's the upside for them.
IYR
: Investors love the yield but risks are high and come to the fore now and again.
IYT
: Maybe the FedEx warning and outlook is still on the mind of some.
XLU
: Utility stocks aren't immune from general stock market selling or profit-taking.
XLV IBB
: They're both in the same business sort of with the former more defensive while the latter is more about high risk R&D with benefits in the future.
IEF, TLT & TIP
: Yeah, it's all pretty incredible. The Fed statement today claimed inflation is too low. It seems TIP buyers are hip to the implication.
BWX
: European bonds rally as the Ireland and Spain sell bonds. The new bailout facility gets a AAA rating and both are buyers of debt on the Fed model.
Continue to Currency & Commodity Markets
$USD/DXY
: I don't work for CAT or BA but I don't like this one bit. Hell, I wanted a nice retirement home on the Amalfi coast.
FXE, FXY & FXF
: The solo interventions in yen and franc have yet to prove profitable. The U.S. is too busy printing money to intervene in currency markets so it seems.
GLD, DGP, SLV & AGQ
: Gold and silver do what they're supposed to do when the dollar is under attack due to our irresponsibility.
DBC
: Up with energy markets one day and then down the next.
$WTIC & XLE
: Both markets have been churning within well defined ranges.
DBB & JJC
: Base metals suddenly hesitate trying to find the right meaning and direction in the Fed's statement.
DBA
: Ag markets are finding resistance strong despite dollar weakness.
MOO
: Ag related businesses like DE, MON & POT dominate this sector.
Continue to Overseas Markets & ETFs
EFA
: Popular, at least as measured by assets, EFA is in the flow with European stock rally overall.
EEM
: Is right at the breakout point.
EWY
: South Korean shares advance but remain at resistance.
EWA
: Aussie market is in the same range with other markets, trending higher but still in the trading range.
EZA, TUR, GXG, EWM & EWD:
Wandering about the planet looking at other opportunities and you can find them selectively.
EWZ
: Higher within the trading range.
RSX
: Russian markets rally with commodities like many others but held back Tuesday by declining energy prices.
EPI
: New highs within major India Markets pushes EPI higher initially only to see some profit-taking late Tuesday.
FXI
: China markets overall remain uncertain regarding government lending policies and bank reserve requirements.
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
A roller-coaster day after the Fed announcement and there's little to add so I won't.
More economic data will flow the rest of the week with most important data coming beginning Thursday.
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, IBB, TIP, BWX, GLD, DGP, SLV, AGQ, DBB, BDD, DBA, DAG, EEM, EPI, EWD, EZA, EWM, GXG, and TUR.
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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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.
