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Didn't we just do this yesterday? Down early with a "stick save" into the close. Once again it's a battle between earnings that beat incompetent estimates and economic data that sucks. Sure, late news came that BP may have the oil leak stopped after nearly 90 days (the stuff is still floating about though). The SEC is about to make a GS settlement announcement of $550M for securities fraud (a mere bag of shells for these guys) and financial reform passed. But, Da Boyz have the dice and they're in total control of how markets close on this light volume action. You can't make this stuff up; only Hollywood could on a bet.

What was the economic data on Thursday? The headlines screamed Jobless Claims fell to 429K but there wasn't any headline regarding Continuous Claims which increased more than 200K. Then came the really brutal news--the Empire State Mfg data came in at 5 vs expected level of 19; this was followed by the Philly Fed which came in at 5 vs an expected 10 reading. You can't spin this positively!

Earnings news came primarily from Marriott after the close Wednesday and JP Morgan Thursday both of which beat estimates by a large amount. After the close, GOOG reported a miss in earnings while GS shares rallied. Bulls think they got away with murder while the SEC must think they didn't get enough. Whatever--Friday will bring earnings news from GE, C and BAC.

Again, volume was light although heavier than Wednesday but breadth was negative indicating more distribution.

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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 Major U.S. Markets

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SPY:

So we got the really bad economic data which drove markets down sharply early and then things calmed until late when Da Boyz seeing volume dry up started to ramp things a little. Then when word leaked about the BP leak and more especially regarding GS Da Boyz took over like George Castanza running from a fire.

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MDY & IWM:

Not as much action down the menu since this isn't where Da Boyz were playing today.

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QQQQ & XLK:

Apple's heavy domination of the NASDAQ-100 is holding back the cubes. XLK has an Apple weighting of just under 10% while the cubes are nearly 20%.

Continue to U.S. Market Sectors, Selected Stocks & Bonds

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AAPL, SMH, AMD & GOOG: Apple's credibility and reputation is tarnished and now they have a PR crisis as news drips, drips, drips. AMD had strong results with (gee!) fewer losses than previously. Google disappointed which hit the stock in afterhours trading.

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GS, JPM & XLF:

Goldman got the settlement they needed which was only about 3.5% of the bonus pool (chump change) for securities fraud. JPM beat estimates by a mile and Dimon said of the new FinReg bill, "we can live with it". This is code for we get bailouts, can hide our toxic waste, the regulatory burden will heaviest of the little guys (who we'll buy up cheap) and most of the costs will be passed on to their customers. BAC and C are on deck and the former has already let it be known that online banking will no longer be free. Thanks Barney and Chris!

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XLB:

Materials have been weaker relatively as commodity prices have been choppy.

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XLY & XRT:

Hard to fathom retail being up with data poor but when there's program trading they're part of the basket.

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IYR:

Rising on hopes dividend will "hold".

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IYT & $BDI:

Transports rising and container ships sinking.

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IEF:

Auctions completed for this week and everything is just fine for the Treasury debt sales until the next one.

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TLT:

Bonds are rallying with bad economic data.

Continue to Currency & Commodity Markets

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$USD/DXY & FXE:

Poor economic data is Bucky's Achilles heel.

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GLD:

Gold is up against some serious and determined selling above $1215 which is most likely central banks.

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DBC:

We're just moving around in the trading range.

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$WTIC/CRUDE OIL:

The weak dollar causes prices to rise in most commodities.

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XLE & BP:

Oil stocks, especially BP, got a boost today but overall the sector like the Gulf is a mess.

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DBB:

Base metals rallied sharply off their lows this week and are now only off slightly. Demand must be soft given all economic data.

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DBA:

Grains lift the complex with wheat, beans and corn leading the way.

Continue to Overseas & Emerging Markets

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EFA:

European markets are on the mend and so is the euro...a double bonus for U.S. investors.

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EEM:

U.S. centric world at the moment. That will change.

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EWJ:

Changing governments is the order of the day.

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EWY:

Korean markets are relatively stronger than many Asian markets lately due to solid economic growth.

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EWA:

Iron ore and coal exports to China may slow but the markets don't know that or care.

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EWC:

Up north things seem to be going along just fine but now we're at resistance.

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EWZ:

Brazil's economy seems to be slowing down perhaps due to uncertain demand from their primary client--China.

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RSX:

Stable gold prices and higher energy prices help Russia.

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EPI:

India isn't sexy enough for bulls today as attention shifts to the U.S.

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FXI:

China reports slower growth and stocks fall--at least some things are logical.

Continue to Concluding Remarks

More earnings on tap and this continues what should be a seasonal rally barring disappointments with "earnings". Investors don't give a rip about lousy economic data. It does and will keep interest rates lower.

There's a buzz about the Fed will launch QE2 or Quantitative Easing Part 2 soon enough. That would hurt the dollar and rally gold one would think. Bonds may also suffer but stocks might enjoy it greatly.

The FinReg bill is passed loaded with taxes you'll be paying for one way or another while it will destroy small banks and financial institutions ill-equipped to deal with the new mandates. Goldman Sachs paid their fine which as I understand it is only 3.4% or so of last year's bonuses. I guess they can live with that. BP plugged the well and that's great news; but, there's still those tar balls and so forth to deal with.

Tomorrow more earnings, but not much economic data to worry about.

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: GLD, UDN, ULE and EPI.

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.