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As you must know, many major indices are price weighted and the DJIA takes the lead in this regard. Six of the highest priced stocks Wednesday (IBM, BA, CAT, DVX, MMM & UTX) provided most of the gains. Stocks were lower most of the morning, but volume seemed light, offering an opportunity for buyers to push prices higher. The theme for bulls was reconstruction in Japan even though EWJ (iShares Japan ETF) finished the day slightly lower. ETFs like XLB (SPDR Materials Sector ETF), SLX (Van Eck Steel ETF) and XME (SPDR Metals & Miners) have the "stuff" needed for reconstruction.

Goldman Sachs CEO Lloyd ("I want me some more me!") Blankfein was on the witness stand today. He confirmed director Rajat Gupta violated "confidentiality" by tipping off hedge fund trader Raj Rajaratnam regarding Buffett's investment in his company. Also in the financial sector, the Fed announced it would not permit BAC to payout a dividend post the recent ("covered-up") bank stress tests. This rightly drove shares of many financial companies lower. Further, it should drive taxpayer's nuts that a Fed "gag order" restricting disclosure of stress test results exists. This is taxpayer money after all.

Meanwhile, speaking of the Fed we had two days of

POMO

resulting in $15 billion in fire power for trading desks of Primary Dealers including GS.

The poor ADBE outlook lingered over tech but traders always seem to find a way to discard bad news and shift focus elsewhere. Of course, this can only be done so long.

Economic data focused on New Home Sales which were down nearly 17% causing the Homebuilder ETF (XHB) to rally. I kid you not!

Energy markets were higher despite higher inventories. OPEC spokesmen stated Tuesday they're comfortable at $120. How about you? Gold and silver hit fresh highs, while the euro dropped on Portugal, base metals rallied and bonds were slightly lower.

Volume was once again light while breadth per the WSJ was unremarkable.

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Continue to U.S. Sectors, Stocks & Bonds

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Continue to Currency & Commodity Markets

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Continue to Overseas Sectors & ETFs

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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 Concluding Remarks

It was a pretty screwy Wednesday to my thinking. But, it shows you the power of the Fed with two large POMO days, and nothing but bad news, allows markets to rally. The high-priced stocks in the DJIA accounted for its gains.

It remains outrageous the Fed has placed a gag order on the release of bank and financial company stress tests. Since these are public companies and with many operating with taxpayer funds you'd think transparency would be a priority. But, that's not the way we roll as a society nowadays.

Thursday will offer significant economic data with Jobless Claims and Durable Goods Orders.

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Disclaimer: Among other issues the ETF Digest maintains positions in: GLD, SLV, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, BWD, GXG, THD, AFK, BRAQ, CHIQ, TUR, & VNM

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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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

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.