Bulls Jump the Gun: Dave's Daily
There isn't much point to writing too much today given that bullish traders jumped the gun Monday. After all, Tuesday's election results (known Wednesday) and Wednesday's Fed meeting is clearly a wall stocks can't hurdle yet.
Markets were strongly higher early on but then caution entered the picture which makes sense. The obligatory end-of-day "stick save" came just as things were getting nasty, and of course, "nasty" just won't do.
Economic data was mixed with Personal Income & Spending weak and below estimates while the ISM Index came in better than expected. Earnings for the most part beat expectations with just an occasional miss here and there.
Volume remains light while breadth was mixed to slightly negative.
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
This is a short commentary since the big events unfold Wednesday (Election results and Fed meeting) and again with the unemployment report Friday. Wednesday should be a particularly interesting day. With markets squarely at resistance levels, volume light and portfolio managers anxious to make their year it should be an exciting week.
The news will come and markets should respond but until then we're just stirring sand in a box.
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, IWM, QQQQ, QLD, TBF, TBT, GLD and DBC.
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.
