End of Quarter Window Dressing: Dave's Daily

The rising VIX this week reflects a lack of confidence and the desire for some protection.
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We ended up down on Thursday but well off the lows as investors sold better news early, but then some buying after mid-day kept things looking okay. Economic data came in better than expected overall. Jobless Claims were better than the previous week but still at high levels as economists just toss-out the same estimates (450K) week after week. GDP data was reported at 1.7% vs 1.6% estimates -- hardly significant. Last was a big upside surprise from the Chicago PMI which came in at 60.4 vs 56 expected.

It was the "September to Remember" -- the best since 1939... oh, wait...that was during the Great Depression so never mind and les quickly move on.

You may not have noticed before putting in the station for a refill that prices are moving higher. Oil prices closed at nearly $80 which should get you into a Prius or a telecommuting job quickly. You know oil production from the Gulf is still stopped so...

Volume rose sharply from previous sessions, and one might get the sense that some of Da Boyz were unloading some of their goods before October gets under way. Breadth overall was mixed to negative.

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SPY

: Again, $115 has been the target and met several times only to fall back. October will be a challenge.

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MDY & IWM

: I think the word for all of these is "tentative."

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QQQQ, AAPL & XLK

: Live by Apple, die by Apple. Well, maybe just for now.

Continue to U.S. Sectors, Stocks & Bonds

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SMH & INTC:

Semis led the way lower for tech today as investors became more uncertain at resistance levels.

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XLB

: Materials should be doing better with base metals but not this week so far.

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XLF

: Matching the same view from yesterday.

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XLY

: A report today said fast food living has never been greater. How long can this go on?

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XLI

: Not much to write about this week.

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IYR

: REITs are having a hard time getting through resistance as the chart keeps reporting.

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IYT

: Still at resistance so not much to say about it.

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XLU

: Utilities have made a nice move and now some profit-taking. Rising oil prices this week isn't helping.

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XLV

: Healthcare sector at support with one day left in the week.

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IEF & TLT

: Bonds still thriving in an Orwellian world.

Continue to Currency & Commodity Markets

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$USD/DXY

: The dollar is still below support and my little support lines will no doubt change tomorrow. The dollar was somewhat lower by day's end Thursday.

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FXE, FXF & FXY

: The euro has plenty of troubles of its own with downgrades of Spain and a major bailout operation in Ireland.

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GLD & SLV

: More volatility at high levels as nervousness sets in.

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DBC

: 50% energy weighting is supportive to commodity tracking indexes.

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$WTIC, USL, USO & XLE

: Energy markets rise strongly on inventory data and a weakening dollar. Mr. Bernanke wants higher prices so there you have it. Happy? I thought not.

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DBB & JJC

: Base metals were mixed Thursday although copper rose.

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DBA & JJG

: Profit-taking is prevalent and substantial on good crop reports.

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MOO

: At support period.

Continue to Overseas Markets & ETFs

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EFA

: Troubles bob to the surface again within the eurozone with both Spain and Ireland.

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EEM

: Not paying much attention to developed markets.

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EWJ

: Resistance holds as EWJ falls back.

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EWA

: Just hitting overhead resistance.

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EWC

: Things are better north of the border overall.

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EWZ

: No change from Wednesday's view.

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RSX

: Russia is a commodity play heavily weighted by energy prices.

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EPI

: Will higher energy prices negatively affect consumer growth in India? We'll see.

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FXI

: Sure, it's the same comment as yesterday. A one year trading range continues.

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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

The rising VIX this week reflects a lack of confidence and the desire for some protection. I'm a little apprehensive myself regarding October which can often be as difficult as September historically.

Anyway, Friday is the start of October and it features important economic data Personal Income & Spending, Michigan Consumer Sentiment and the ISM Index.

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: MDY, QQQQ, XLI, IYR, UDN, FXE, FXF, GLD, SLV, AGQ, DBB, BDD, DBA, MOO, EEM, EDC, EWJ, EWA, EWZ & EDC.

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

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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.