It wasn't all that bad now, was it? As the day progressed a little Novocain was provided by bulls who very much believe in the meme: good news is good and bad news is better. Markets inched steadily higher since every gap lower is a buying opportunity. Besides, Thursday was Veterans Day so there was no economic data to spoil the party.
The G-20 is basically finished with serious issues and controversies papered over.
Meanwhile Bernanke's QE plan is getting more negative reaction even as he outlines another $100 billion in Treasury bonds to be purchased over the next month. It's beginning to look a lot like Christmas for the "gang of 21"' (the Fed's Primary Dealer network). Wouldn't you like to be a Primary Dealer? You can sell your bonds to them and get freshly minted greenbacks to trade. What the banks do with that money is anyone's guess since they're not telling. Most believe it pushes stock prices higher, and indeed, Bernanke himself suggested that much last week.
Here's the deal from our perspective anyway -- markets were overbought and we observed dozens of weekly DeMark 9 counts on all major markets and subsectors. Usually that indicates "trend exhaustion'", sideways action and perhaps even a reversal. Like any indicator it's not perfect but it's more perfect than me, and I'll leave it at that. Further down is the obligatory SPY chart but I've added the weekly 9 as a demonstration. You'll note previous 9s with subsequent reactions in the charts.
Now I'm still running around NYC for meetings with a variety of ETF sponsors, brokers and my friends at TheStreet.com.
Volume was low today while breadth was heavily negative on NASDAQ with the CSCO effect while modestly so elsewhere.
Below is the weekly SPY chart with DeMark annotations. The "9 count" and those previously show primarily expected reactions. But, bullishly this is an obvious "cup"' formation without the "handle"' still needed. This is a pretty powerful combination meaning we could expect a correction to form the handle and then move higher.
Continue to U.S. Sectors, Stocks & Bonds
Continue to Currency & Commodity Markets
Continue to Overseas Markets & ETFs
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
Disney (DIS) reported disappointing results just before the close as results were leaked. An investigation will yield who did what when; but, the fact remains this was another poor report by a market leader.
Markets were weak today but it seems selling was modest overall as the current "win-win"' theme remains dominant from bullish views.
Technically markets are due for a rest or pullback of some magnitude and I put a lot of confidence in DeMark indicators in this regard. But, it's not perfect and if trends remain very strong (as with precious metals for example) most indicators get steamrolled.
Friday we have Michigan Consumer Confidence data which will be spun to suit most tastes. Also on deck are more earnings results especially from retailers.
I'm still in NYC and will be on the road Friday. I don't know if we'll post or not.
Let's not forget our veterans this day. At times we forget there are over a hundred thousand young men and women risking their lives in far off lands. We should honor them.
Let's see what happens. You can follow our pithy comments on
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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
Dave Fry is founder and publisher of
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