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We hit new recent highs in markets as bulls are fired-up regarding earnings and QE. But, markets finished well off their highs of the day. It seems troubles with semiconductors and INTC's earnings report negatively simmered beneath the euphoria.

I've got this late 2007 feeling again where markets rallied in the late fall with bad news well-known but ignored until the collapse early the next year. Today its mortgage fraud and smart people are talking about it like

Janet Tavakoli

and

Felix Salmon

. How long can this scandal go on is hard to know but the drip, drip, drip can quickly turn into a tsunami. For now bulls are dominant and the

Ship of Fools

sails on.

Today's volume was typically low while breadth was quite positive.

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TheStreet Recommends

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Continue to U.S. Sectors, Stocks & Bonds

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Continue to Currency & Commodity Markets

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Continue to Overseas Markets & ETFs

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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

Up again we go abetted primarily by the Fed's accommodative stance more than earnings news. Markets are getting overbought and the HFTs took a bite out of gains late in the day.

Thursday we get Jobless Claims once again with estimates now stuck at 450K.  Earnings will feature Fairchild Semiconductor and we'll see if negative trends from LLTC and INTC continue. Also up is Winnebago Industries which is a good tell on discretionary spending. After the close more news from semis include AMD and internet leader GOOG.

Out of sight for now despite serious problems in the building mortgage scandals and associated difficulties. This is the reminder from late 2007 which will come home to roost eventually. But, for now, it's a make hay while the sun shines market.

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, MDY, IWM, TNA, QQQQ, QLD, XLI, XLB, UYM, UDN, FXE, FXA, GLD, SLV, AGQ, DBB, BDD, JJC, DBA, JJG, DBC, UCO, MOO, XME, EFA, DZK, EEM, EWJ, EWC, EWA, EWY, THD, BRAQ, CHIQ, EWZ, EPI, FXI and XPP.

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

.

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.