High Gas Prices Slow Rally: Dave's Daily
The Greek bailout situation dominated early trading in the U.S. At first glance it appears the Europeans are committed to keeping the eurozone intact. After all, many central banks beyond the eurozone (China and no doubt the Fed) are teaming up to lend support. Further, the old saying, "in for a penny, in for a pound" shows TPTB have gone too far down the bailout road to back away now. Or, maybe not, since some clear thinkers suggest Greek debt burdens will be too high for their weak and weakening economy to service. So the debt situation may be the cancer that still negatively grows on the global economy.
U.S. stocks moved higher early as the psychological 13,000 level on the DJIA was exceeded briefly. Like so many of these round number targets, once hit, there was selling into it.
Positive earnings results from Macy's (M), Home Depot (HD) and Saks (SKS) buoyed equities and the retail sector (XRT). Meanwhile, results from Wal-Mart (WMT) were disappointing while Kraft (KFT) produced a complex report that was hard to comprehend given all the adjustments.
Returning to global debt burdens it's logical to assert central banks and politicians have chosen the "easy button" inflating prices versus confronting harder choices. That's the message from a weakening dollar (UUP), higher gold GLD) and commodity prices Tuesday. Rising crude oil (USO, USL) and gasoline prices (UGA) especially will put a quick crimp on consumer spending once again.
The White House recently chimed-in regarding this politically sensitive issue by stating: "Rise in gasoline prices caused by a variety of global factors, including unrest in some parts of the world and fast growth in others." And, to add lunacy to these comments, WH spokesman Jay Carney stated: "The fact that this is happening only underscores the need... (wait for it)... to have a comprehensive energy policy." (Yes, he really said that!) I guess he forgot to mention Iran or the poor level of refining capacity in the U.S. occasioned by restrictive regulatory issues.
So, remember if oil prices continue to rise and this president, like others before him, will release supplies from the SPR. But without refining capacity, this is just a useless political stunt.
Stocks closed modestly higher overall although the action was sloppy. Volume was once again quite light and breadth per the WSJ was mixed to negative.
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SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
IWM - The iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the small capitalization sector of the U.S. equity market as represented by the Russell 2000 Index. The index represents the approximately 2,000 smallest companies in the Russell 3000 Index.
QQQ -
PowerShares
Capital Management LLC is passionate about our goal of delivering the highest quality investment management available through one of the more benefit-rich investment vehicles ever created, the exchange-traded
fund.PowerShares
QQQ¿, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consists of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the
Nasdaq
Stock Market based on market capitalization. The portfolio is rebalanced quarterly and reconstituted annually.
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XLK - The Technology Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Technology Select Sector Index (ticker: IXT). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
XLB - The Materials Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Materials Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
XLF - The Financial Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Financial Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
IVE - The iShares S&P 500 Value Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S. large-cap value stocks, as represented by the S&P 500/Citigroup Value Index.
IYR - The
iShares
Dow Jones U.S. Real Estate Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, to the performance of the real estate sector of the U.S. equity market, as represented by the Dow Jones U.S. Real Estate Index.
IYT - The
iShares
Dow Jones Transportation Average Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of Dow Jones Transportation Average Index.
IEF - The
iShares
Barclays 7-10 Year Treasury Bond Fund seeks to approximate the total rate of return of the intermediate-term sector of the United States Treasury market as defined by the Barclays Capital U.S. 7-10 Year Treasury Bond Index.
Continue to Currency & Commodity Market ETFs
UUP - The
PowerShares
DB US Dollar Bullish Fund (Symbol: UUP) is based on the Deutsche Bank Long US Dollar Index (USDX®) Futures Index¿ (DB Long USD Futures Index). The Index, which is managed by DB Commodity Services LLC, is a rules-based index composed solely of long USDX® futures contracts. The USDX® futures contract is designed to replicate the performance of being long the US Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish
Krona
and Swiss Franc.
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FXE -
CurrencyShares
Euro Trust is designed to track the price of the euro net of Trust expenses, which are expected to be paid from interest earned on the deposited
euros
.
GLD - The objective of the SPDR® Gold Trust¿ is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses.
GDX - The Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE
Arca
Gold Miners Index. The Index provides exposure to publicly traded companies worldwide involved primarily in the mining for gold, representing a diversified blend of small-, mid- and large- capitalization stocks. As such, the Fund is subject to the risks of investing in this sector.
JJC - The Dow Jones-UBS Copper
Subindex
Total
ReturnService
Mark is a sub-index of the Dow Jones-UBS Commodity Index Total
ReturnService
Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.
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SLV - The objective of the
iShares
Silver Trust is for the value of the shares of the
iShares
Silver Trust to reflect, at any given time, the price of silver owned by the
iShares
Silver Trust at that time, less the
iShares
Silver Trust's expenses and liabilities.
DJP - The
iPath
® Dow Jones-UBS Commodity Index Total
ReturnService
Mark ETN is linked to the Dow Jones-UBS Commodity Index Total
ReturnService
Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The commodities represented in the Dow Jones-UBS Commodity Index Total
ReturnService
Mark are rebalanced annually; however, the weightings fluctuate between
rebalancings
due to changes in market prices.
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USO - The United States Oil Fund, LP ("USO") is a domestic exchange traded security designed to track the movements of light, sweet crude oil ("West Texas Intermediate").
USL - The United States 12 Month Oil Fund, LP ("USL") is an exchange traded security that is designed to track the movements of West Texas Intermediate light, sweet crude oil (WTI)
IXC - The iShares S&P Global Energy Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of companies that Standard & Poor's deems part of the energy sector of the economy and important to global markets, as represented by the S&P Global Energy Sector Index. The index is a subset of the Standard & Poor's Global 1200 Index.
DBA - The
PowerShares
DB Agriculture Fund is based on the Deutsche Bank Liquid Commodity Index Diversified Agriculture Excess Return¿ and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. The Index is intended to reflect the performance of the agricultural sector. You cannot invest directly in the Index. Ordinary brokerage commissions apply.
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Continue to Overseas Sectors & ETFs
EFA - The
iShares
MSCI EAFE Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the European, Australasian and Far Eastern markets, as measured by the MSCI EAFE Index.
EEM - The
iShares
MSCI Emerging Markets Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index.
EWJ - The
iShares
MSCI Japan Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Japanese market, as measured by the MSCI Japan Index.
EWA - The
iShares
MSCI Australia Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Australian market, as represented by the MSCI Australia Index.
EWC - The
iShares
MSCI Canada Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Canadian market, as measured by the MSCI Canada Index.
EWG - The
iShares
MSCI Germany Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the German market, as measured by the MSCI Germany Index.
EWU - The
iShares
MSCI United Kingdom Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the British market, as measured by the MSCI United Kingdom Index.
EWY - The
iShares
MSCI South Korea Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the South Korean market, as measured by the MSCI Korea Index.
EWZ - The
iShares
MSCI Brazil Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Brazilian market, as measured by the MSCI Brazil Index.
RSX - The Russia ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the
DAXglobal
® Russia+ Index. The Index provides exposure to publicly traded companies that are domiciled in Russia, and traded in Russia and/or on leading global exchanges. As such, the Fund is subject to the risks of investing in this country.
EPI -
WisdomTree
India Earnings Fund seeks investment results that correspond to the price and yield performance, before fees and expenses, of the
WisdomTree
India Earnings Index.
FXI - The
iShares
FTSE China 25 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE China 25 Index.
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.
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.
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
One of the more interesting stats from last week was continued outflows ($2.4 billion) from equity and bond ETFs according to Deutsche Bank. This is surprising given market performance.
The mood overall remains bullish but wary particularly if gas prices soar.
Let's see what happens.
Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current positions if any are embedded within charts: Lazy & Hedged Lazy Portfolios maintain the follow positions: VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, & EWU.
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
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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
Dave Fry is founder and publisher of
, 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.
