The George Costanza Market: Dave's Daily - TheStreet

The George Costanza Market: Dave's Daily

Stock markets have been moving in the opposite direction from day to day. Just when you think the indices have had it, we go the other way.
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George : It's not working, Jerry. It's just not working.

Jerry : What is it that isn't working?

George : Why did it all turn out like this for me? I had so much promise. I was personable, I was bright. Oh, maybe not academically speaking, but ... I was perceptive. It became very clear to me sitting out there today, that every decision I've ever made, in my entire life, has been wrong. My life is the opposite of everything I want it to be. Every instinct I have, in my entire life... It's all been wrong.

(A waitress comes up to George)

Waitress : Tuna on toast, coleslaw, cup of coffee?

George : Yeah. No, no, no, wait a minute, I always have tuna on toast. Nothing's ever worked out for me with tuna on toast. I want the complete opposite of it. Chicken salad, on rye, untoasted ... and a cup of tea!

Stock markets have been moving in the opposite direction from day to day as well. Just when you think the indices have had it, we go the other way. The news today certainly wasn't inspiring since many cited China's 48% export growth (known fully yesterday), Jobless Claims (hardly any improvement) a modest rally in the euro (up a little over 1%) as Chinese pension funds say they won't be a seller and the ECB's Trichet will be buying euro zone bonds injecting liquidity. Trichet made this statement while saying "it didn't result in any monetary policy change." What was it then if not that?

All I can glean from the rally today was a major short squeeze with stock indexes almost universally at support levels drawn here the past month.

Some others are suggesting

with Quad Witching next week the trend has been to prop things the Thursday before. I hadn't heard that one before frankly.   

While the headline numbers for the indexes were spectacular Thursday volume was light for a rally like this reminding us of the previous rally of June 3

rd

when the DJIA rallied over 220 points also on light volume. It proved ephemeral. Breadth today was quite positive and may have been a 90/10 day.

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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 Major U.S. Markets

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SPY:

As indicated support lines are holding which remains the major factor as we plod to month end. Even a rally into the month's end may only leave us with a right shoulder in a H&S top.

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MDY & IWM:

Sure it seems universal from major index to major index--the "stick save" was in.

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QQQQ:

Tech hit the road running today although there were some disappointments within the sector although Apple overcame early losses on security glitch.

Continue to U.S. Market Sectors, Selected Stocks & Bonds

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SMH, INTC & TXN

: Since I highlighted these Wednesday you can see the reversal in the sector Thursday.

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XLF, C, GS & AXP:

Financials rallied sharply today as investors pondered a continuation of the steep yield curve which is positive for the banksters. The one sore thumb was GS where more probes will keep the attorneys busy and the stock an underperformer.

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XLB:

Materials are the stars of the show for the major sectors as DD kicked things off early with their approval of a new soybean seed and the sector hasn't looked back.

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XLP

: We all need stuff (toothpaste, deodorant, shampoo, toilet paper, booze, drugs and etc) and you can get them all in the constituents here.

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XLY:

The rise here defies my imagination emotionally which is why following the tape makes more sense.

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IYR:

If you read yesterday's link regarding the $1.3 trillion in debt due over the next 3 years you wouldn't want to own this sector. But, pish-posh, that's 3 years away!

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IEF & TLT:

Treasury's fell as stock market rally gained steam but not until after the auction of 30-year bonds went well. The yield was 4.18 and the lowest since October. When that was over did the powers that be take the proceeds and buy stock index futures? Just kidding of course.

Continue to Currency & Commodity Markets

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$USD/DXY, UUP & FXE:

Lots of action to the upside today for the euro if you consider a little over 1% a big deal. Look, the euro is oversold and dollar overbought so you should expect this type of action once in awhile.

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GLD:

What's going on here is some investors are taking money off the table here and putting it in stocks. That's the trade they like as the dollar gives back gains.

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DBC:

Mostly higher with energy and base metals.

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$WTIC/CRUDE OIL:

Dollar off some enhanced crudes rally but let's just say it's an overreaction.

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XLE:

The energy sector rallied substantially as BP led the way with thoughts of the dividend being safe and bankruptcy off the table. That's the bet "today" anyway.

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DBB:

Base metals have reversed course this week and rallied substantially to the area just above support. China's export data lends encouragement to bulls.

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DBA:

Agricultural commodities rallied today with the fall in the dollar which has been just one of many restraints. Nevertheless, DBA is just clinging to stay in the box.

Continue to Overseas & Emerging Markets

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EFA:

There are plenty of shorts to squeeze including us but we'll hang in there for a bit yet.

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EEM:

It's just another stick save off support for EM's.

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EWJ:

This market is just moving along with everything else.

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EWA:

As long as conditions in China are deemed to be improving and the government doesn't tax the miners out of business you'll get a big move higher like Thursday.

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IEV& EWG

: European shares were squeezed hard today.

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EWZ:

Brazil leads the way higher with rise in commodity markets and perceived renewed strength in China.

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FXI:

Let's put it this way, the news from China that exports increased 48% was already known by Shanghai markets last night but markets were sold. Here people must have a different mindset.

Continue to Concluding Remarks

I am feeling a little Costanza-like since these day-to-day reversals are getting so that images and themes from one day are the opposite the next. But, this is the market we have, dominated by trading desks, hedge funds and high frequency traders.

Sources have reported Goldman Sachs was in the S&P futures pits heavy this morning driving prices higher and squeezing shorts throughout the day. That may account for the light volume as others just watched.

Until proven differently, today was no different than the light volume 220 point rally on June 2

nd

. Perhaps I'm wrong, and if so, Mr. Market will prove me wrong.

A late breaking story is the SEC is forcing DELL to restate earnings which will drop earnings over 5 cents per share.  

Sadly, as an old sailor I've been following the adventure of a 16 year old California girl making an attempt at circumnavigating the globe.

It appears she won't make it and may be lost at sea

.

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, SH, SDS, UUP, EUO, GLD, EFZ and EUM.

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.