Late Summer Market Doldrums: Dave's Daily

This is a market with something seriously wrong -- bonds in a bubble while stocks hang tough.
Author:
Publish date:
Image placeholder title

But wait,

GM

is getting ready to launch their new issue. You want some? The underwriters will be working hard to push this deal out. And no, you shouldn't expect it to show up in the DJIA right away unless there's a government order to do so.

Most of the news Monday wasn't market friendly. Lowe's missed on earnings, the NY Fed's Manufacturing Index missed consensus and homebuilder's confidence did the same.  

Tuesday's volume was pathetically light and breadth slightly positive which might ease some short-term oversold conditions.

Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title

SPY

: The action overall is uninspiring within the trading range.

Image placeholder title
Image placeholder title

MDY & IWM

: A little pop from the more oversold sectors.

Image placeholder title
Image placeholder title

QQQQ & AAPL:

Tech sector higher on the day but not spectacularly so. Are the Droid phones hurting Apple? Some think so.

Continue to U.S. Sectors, Stocks & Bonds

Image placeholder title
Image placeholder title

CSCO & IGN

: CSCO bounced right off support which is clear for all to see which in turn helped the sector.

Image placeholder title
Image placeholder title

EBAY & FDN

: EBay climbs back to previous support levels but the sector is in the range.

Image placeholder title
Image placeholder title

C & XLF

: Pretty boring within financials overall. Most of the upside in insurance while the rest of the sector does a slow fade.

Image placeholder title
Image placeholder title

AMGN & IBB

: Amgen gets rating cut which keeps IBB from much progress.

Image placeholder title
Image placeholder title

LOW & XRT

: This week many names will be featured along with WMT and HD for example. Most results thus far have been disappointing but many seem to like retail which seems odd at least to me.

Image placeholder title
Image placeholder title

GGP & IYR

: You can see clearly John Paulson's position building as GGP was well-propped throughout the 2

nd

quarter.

Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title

IEF, TLT, TIP & LQD:

Bond markets are sending a very scary and, as far as stock markets are concerned, disconnected message.

Continue to Currency & Commodity Markets

Image placeholder title

$USD/DXY

: China reportedly announced recently they prefer the euro currently. Who cares? So do hip hop artists!

Image placeholder title

GLD

: You almost have to own gold at the moment given how weird conditions are.

Image placeholder title

DBC

: Most commodity markets flat to lower Monday as grain crops seem to be doing better.

Image placeholder title
Image placeholder title
Image placeholder title

$WTIC, BP & XLE

: Energy markets are locked in their trading ranges. BP is in its own world.

Image placeholder title

Continue to Overseas Markets & ETFs

Image placeholder title

EFA

: Everything a little higher today as we melt up on light volume.

Image placeholder title

EEM

: EM's also found reason to rise Monday as they had gotten a little oversold.

Image placeholder title
Image placeholder title

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.

Image placeholder title

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.

Image placeholder title

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

Many prominent hedge funds are reporting large positions in some companies and sectors. David Einhorn adds to MSFT and PFE; John Paulson adds a ton of GS and GGP, Berkshire buys more JNJ and Eton Park buys 6.6 million shares in GLD. So, these are the folks keeping markets propped even with volume very light.

This is a market with something seriously wrong--bonds in a bubble while stocks hang tough. Something's got to give.

This week is all about retailer's earnings with most companies reporting this week.

Let's see what happens. You can follow our pithy comments on

twitter

and become a fan of ETF Digest on

facebook

.

Disclaimer: Among other issues the ETF Digest maintains positions in: TZA, FAZ, GLD, UDN, TIP 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

.

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.