It was one of those days when good news from Retail Sales beating expectations (up 1.2%) was offset by an awful Empire Manufacturing Index (-11.14 versus 17 expected) and a
Philly Fed forecast
which reduced GDP growth and gains in employment. Even another round of
couldn't energize bulls.
We rose quickly early but by midday, bulls just gave up and selling ensued.
It doesn't help when bonds are getting pummeled even as the Fed is doing its QE thing. Rising yields on the long end offer stiff competition to stocks. Why would bonds sell-off in the midst of QE? Because the smell of inflation is in the air and bond vigilantes smell blood.
Volume was quite light while breadth was mixed at best.
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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.
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.
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
Monday was a dud but it's just another day of light volume and many mixed messages. Bond markets are getting wobbly. Dependent on your view this is either good news (the economy is improving so rates should rise to more normal levels) or it's bad (inflation is in the air and the only way to check it is with higher rates).
Tomorrow's economic news is centered on Industrial Production expected to be up around .2%.
Meanwhile, earnings news will continue to dribble out from many retailers led by WMT and HD. It's also reported that Warren Buffet has dumped his HD shares.
At any moment the GM IPO will be released and already there are plenty of folks on the hook to buy it talking it up. Some things just don't change.
Let's see what happens. You can follow our pithy comments on
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