Stocks Bounce Off Support: Dave's Daily

Options expiration can create some weird action. Perhaps today was no different.
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Most pundits have been highlighting S&P 1070 as serious support. We were beneath that level most of the day but managed to close at 1071.69 or just a touch from falling into the abyss. The Nasdaq managed to eke out a tiny gain. There wasn't any economic data to sour investors so we melt-up once again on light volume.

Further, unless it escaped your attention given everything else taking place, Friday was August options expiration. So the fellas at the options exchange had their own agendas intent on forcing some puts/calls to be exercised. It's the game that's played on these occasions.

Not to be too cynical but TPTB also have GM to get priced and they'll pull out all the stops to get a deal done.  

Volume was on the light side especially for an options expiration day. Breadth was negative to mixed.

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SPY

: We're just floating in this zone annoying both bulls and bears. There's nothing wrong with the sidelines sometimes.

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MDY & IWM

: Both closed up on the week if that's a victory.

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QQQQ & AAPL

: Here's the deal, if you own the QQQQs you own Apple and a few other throw-ins to make it look respectable.

Continue to U.S. Sectors, Stocks & Bonds

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HPQ, DELL, MRVL & SMH

: It's hard to know much about Marvel that was so, um, marvelous but that matched expectations but the guidance was good. HPQ and DELL didn't provide much help overall.

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JPM, MS & XLF

: The entire sector was weak the entire week. I'm waiting for another shoe to drop.

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GPS, TGT & XRT

: I really don't like this sector. Where's the big back to school rush? Not at Gap. Target didn't do anything spectacular to justify a great move but the tape is the tape.

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XLB

: Up on the week but nothing special for this important sector. Overall I'd say it was a disappointment as the economic data undid it.

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IEF, TLT, LQD, EMB, HYG & PFF

: All are displaying the panic to buy bonds versus stocks. It's an extraordinary circumstance and we're

literally

in uncharted waters.

Continue to Currency & Commodity Markets

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$USD/DXY

: Is there another shoe to drop in the eurozone or are people just feeling a little jumpy.

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GLD

: Gold saw some profit-taking on Friday which is normal when the dollar is stronger.

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DBC, WTIC, XLE & FCG:

Commodities take economic data poorly driving down prices as demand is perceived to weaker going forward.

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Continue to Overseas Markets & ETFs

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EFA & EWG:

For U.S. holders down with a falling euro today while German stocks faded sharply.

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EEM & EWM

: From Thailand, Indonesia and even Vietnam many of these markets are ignoring the overall gloom found in developed markets.

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EEB

: The BRICs are doing the same thing but Southeast Asian shares are doing really well.

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EPI

: There was some profit-taking in India Friday as the major index backed away from a 30 month high.

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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

Options expiration can create some weird action. Perhaps today was no different. We sold off hard early but when volume dried up around noon Da Boyz went to work.

After a week like this, I'm as tired as markets and it shows in the skimpy level of charts.

Bulls don't have much to look forward to now earnings are about over. Perhaps they'll feast on better economic data like if Jobless Claims next week fall from 500K to 490K--silly right? Bulls still have the Fed at their back with zero interest rates and POMO with the next on intervention on the 24

th

.

Have a great weekend everyone!

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Disclaimer: Among other issues the ETF Digest maintains positions in: TZA, GLD, DBC, UDN, FXE, DBC, EEM, 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

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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.