The Yo-Yo Market Continues: Dave's Daily - TheStreet

The Yo-Yo Market Continues: Dave's Daily

Home sales data were above estimates which got bulls pumped up. Perhaps more bullish news came as Obama hinted at a strong jobs number Friday even including census workers.
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Not much happening lately is surprising. We have another light volume melt-up as home sales data were above estimates which got bulls pumped-up. Perhaps more bullish news came as Obama hinted at a strong jobs number Friday even including census workers. Current estimates range in growth of around 500K jobs. So, investors assumed two of the major problems with economic growth, housing and jobs are now solved.

Energy and financial sectors led early gains as traders deemed selling overdone and squeezed shorts.

Nevertheless, volume overall was light and it being early in the month dividend reinvestment which played a role in the rally. It seems most investors are out of the market as conditions remain too volatile. Breadth today was quite positive.

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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:

I'll admit it's hard to write about these two-way markets every day. Nevertheless, it's a dirty job and somebody's got to do it. The low volume was disappointing and the 2:15 buy program express only adds to frustration since most sophisticated investors know markets now are dominated by trading desks and hedge funds. So, when we see a light volume rally like today, we know we're not seeing much investing from the public. Just Da Boyz pushing things around.

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MDY, IWM:

Both Mid and Small-Caps are participating but in the end both markets are just flat on the week. The volatility is enormous.

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QQQQ:

I guess if Apple is over 15% of the index, the index should be doing pretty well.

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

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XLF:

Financials take their cue from better housing data which will help the toxic waste still on their books carried at, ahem, different values.

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XLI:

This is just another example of markets in trading range pending better or worse news.

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XLV:

An underperformer right at support.

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XLB:

There's not much to say when sectors rally off support but also present this double top appearance. Perhaps just another trading range for now.

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XLY, DIS:

Disney, one of the heavyweights in XLY, was a notable winner today suggesting it would be a mistake to think the company would lose out on revenues from new technologies.

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IYT:

Transports are along for the ride literally. I just don't have much more to add on a day like this!

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IEF, TLT:

Bond prices fall as stocks rally. Simple.

Continue to Currency & Commodity Markets

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$USD/DXY, UUP:

Dollar is still levitating at high levels kept down by central bank interventions.

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FXE:

Let's not kid around, the ECB with the cooperation of the Fed (your dollars at work) are actively intervening in currency markets to support the euro.

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GLD:

The U.S. Mint is out of gold coins. That should tell you enough regarding demand.

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DBC:

The long trading range with DBC remains in place as oil rallied today helping to recoup some losses.

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$WTIC/CRUDE OIL:

With home sales better and Obama touting growth in jobs demand for energy will increase then right?

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XLE, HAL, SLB, BP and RIG:

Investors were in full speculation mode today.

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DBB:

Any economic recovery will depend on strong demand for base metals.

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XME:

Just another big rally near previous support for steel companies and miners. After all they're in the program buy basket.

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DBA:

The weather's too good and farmers overplanted in the face of high carryover inventories.

Continue to Overseas & Emerging Markets

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EFA:

European stocks rallied from oversold conditions along with U.S. markets as eurozone members stimulate and prop anything and everything.

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EEM:

Commodity markets higher and so too are EM's.

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EWJ:

Japanese stocks thrive even as the prime minister resigns.

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EWA:

Aussie stocks rally as the argument over the 40% miners tax heats up and will no doubt be modified.

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EWZ:

Better commodity prices and overall stock tone help Brazil.

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RSX:

It's said the Russian's are buying all the gold the IMF is selling.

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FXI:

There's a lot of confusion regarding China's economic situation. Shanghai indexes are officially in bear markets but oversold. Further, property prices are starting to fall as in manufacturing data.

Continue to Concluding Remarks

It's possible the HAL 9000s were infected with some sort of virus over the past few days. The previous late day selloffs must have thrown the algorithms off. But markets are definitely in a yo-yo like condition. Up and down repeatedly.

The bigger rumor is the unemployment number coming on Friday (with a hint of what's ahead with Jobless Claims Thursday) will be a huge upside surprise. If Obama is studying LBJ's playbook, he'll know how he would manipulate data that didn't suit him. When presented with data he didn't like, LBJ would send it back and not release it until the data pleased him. He was just that kind of guy. Unemployment data has been the subject of great debate with the so-called birth/death model (estimates of newly unemployed vs estimates of those who've given up). Since this is just a "made-up" number it's misleading which is why some suggest real unemployment rates are around 15% or more. But those that can manipulate markets and get away with it will continue to do so no matter the party in power at the time.

This has been one of the tougher markets to contend with from a technical view given the lack of durable trends. One day you feel it's just a correction under way and the next a market crash is imminent. It's just the market we have for now and it is managed and controlled by just a few players picking each other's pockets.

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: UUP, EUO, GLD, DGP, EUM and EDZ.

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.