Markets Levitate on POMO and Earnings: Dave's Daily

Another round of QE2 via POMO today resulted in the Fed throwing another log on the fire giving the privileged few a little over $6.2 billion to play with.
Author:
Publish date:
Image placeholder title

What's missing from this picture? Volume. Friday's volume was higher, but it was options expiration which usually adds to the action. Another round of QE2 via

POMO

today resulted in the Fed throwing another log on the fire giving the privileged few a little over $6.2 billion to play with.

Earnings from Citigroup were a little better than expected and that got financials pumped higher but does little to resolve the smoldering mortgage dilemma.

Other earnings news is coming after the close with IBM beating expectations but the stock drops nearly 3% on the news. Apple's earnings also beat analysts' expectations by a large margin proving only one thing--either analysts are doing a poor job or companies are deliberately low-balling numbers.

The dollar rallied initially off oversold conditions but later retreated. This caused gold, oil and other commodities to rally as well.

Bonds were higher for no particular reason since in this environment everybody's a winner.

Volume was light overall and breadth was positive.

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

Continue to U.S. Sectors, Stocks & Bonds

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

Continue to Currency & Commodity Markets

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

:

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

Continue to Overseas Markets & ETFs

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

"Selling the news" seems the operative phrase for those trading after the close. You can see they've fixed "sort of" the quote for SPY but don't be misled by it. Since I start this post with SPY generally these types of data point errors generally get repaired quickly but not so today. Therefore, this post was delayed at the start and is briefer as a result.

Image placeholder title

There will be plenty of earnings news on tap for Tuesday when BAC, KO, EMC, GS, ITW, STT and many others will release reports. Economic data will include Housing Starts and Permits.

The only thing to say with light volume markets, machine driven trading and lots of news is: "keep your seat belt fastened at all times". 

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: SPY, QQQQ, IWM, MDY, XLB, XLI, XLU, IBB, UDN, FXE, GLD, SLV, AGQ, DBB, BDD, JJC, DBA, JJG, EFA, EEM, EWJ, EWA, EWZ, 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

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.