Light Volume Shallow Selloff: Dave's Daily
We just arrived in NYC and spent the day in meetings with
TheStreet.
I'm just a little behind things and so too are the markets.
The important thing is markets are overbought and in need of some corrective action even if it's sideways movement. After all, we've had a big run and news from earnings and economic data are light.
Equity markets hit the skids early with the DJIA dropping 100 points early on government bank
subpoenas
. But with another $6 billion in
markets were able to mount a slow steady recovery throughout the day.
And speaking of subpoenas, Janet Tavakoli (Tavakoli Structured Finance) and I discuss bank and mortgage fraud
.
Not everyone is on board with the Fed's QE actions especially from overseas; but, it was notable today that
Fed Governor Warsh
issued a dissenting view as well.
Despite a small rally in the dollar, commodities were mostly flat with the notable exception of precious metals -- with new highs in gold and silver. Bonds rallied slightly.
Volume was especially light while breadth was flat to mixed.
Continue to U.S. Sectors, Stocks & Bonds
Continue to Currency & Commodity Markets
Continue to Overseas Markets & ETFs
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
With the exception of markets like gold, silver, cotton, grains, coffee and sugar (all things not in the CPI) today was rather dull. Commodities most of us watch most (energy and precious metals) have performed well overall but the big winners are in the agricultural space. This will hit consumers' pocketbooks hard in the coming months as higher prices will be passed on. This is the downside of QE. Other than these commodities today was rather dull.
We don't have much in the way of economic data until Wednesday. We're on the down-slope with earnings reports with only another week or two of reports. Earnings from retailers will be featured toward the end of the week. They should set the tone for what to expect from Black Friday and holiday sales estimates.
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: SPY, MDY, IWM, QQQQ, XLI, IYR, TBF, TBT, UDN, GLD, DBC, DBA, UCO, EFA, EEM, EWJ, EWA, EWC, EFA, EEM, EWZ, RSX, EPI and FXI.
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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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.
