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Jobless Claims were better than the previous week but those still on the rolls increased. Headline writers were busy promoting the drop from the previous week. That didn't stick very long sort of like a football stadium wave that never catches on. Nevertheless, the DJIA experienced a 200 point intraday swing. We are coming to month-end and whether they deny it or not, we'll still get some window-dressing efforts.

Just a couple of trading days ago we were much overbought and now we're not. So, if you're a dip buyer, get your scooper ready. On the other hand, while earnings continue to roll-in with 60-80% of reports beating estimates, we'll have some important economic data Friday. (Again I wonder; are analysts incompetent given such wide misses? Do the companies deceive them? Or, is there something more nefarious at work?) Economic data Friday will include GDP, Chicago PMI and U. of Michigan Consumer Sentiment. How bulls and bears duke it out over both earnings and data could be a spectacle, or, the last day of trading for July could end with a whimper.

The featured earnings winner Thursday was Exxon but the stock closed lower while other notable losers were Symantec and Nvidia.

Volume was again light and breadth mixed to negative.

SPY: I moved support for SPY on daily charts lower but I think the 200 day MA is much in focus and bears watching.

MDY & IWM: We're just drifting into month end without a lot of conviction. Frankly, I'd watch IWM closely following economic data Friday since it's the most economically sensitive sector.

 

QQQQ: Symantec and Nvidia didn't help issues in tech-land today.

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

ORCL & AMZN: A late lawsuit alleging fraud by the U.S. on hundreds of millions of contracts with Oracle was filed late today. This could have serious implications if others were to join-in on the suit. Separately, Amazon announced new Kindle models and since I'm not into the iPad for my use it seems attractive.

XLF: Financials quiet with little excitement except for Citigroup which paid a $75M fine for fraud. Now that's a wrist slap!

 

XLI: Industrials put in their move last week and now we're at rest.

 

 

XLV: Healthcare sector did break above resistance briefly as it did a few weeks ago only to succumb to the range.

XLB: What's interesting is the rise in base metals and other commodities hasn't spilled-over to materials, at least for now.

XLY & XRT: There was little interest or news in retail sectors allowing for any gains beyond resistance.

 

 

IYR: Everything you wanted to know (good and bad) was posted at ZeroHedge today in a lengthy commentary.

 

IYT: Nothing productive to say Thursday.

IEF & TLT: Yeah, these are the same comments as yesterday.

 

MUB: The logic is taxes will increase so better buy those tax-exempts now even if many are about to default.

 

 

TIP: Everywhere we look in bond land we see markets saying--recession.

Continue to Currency & Commodity Markets

$USD/DXY, UDN, FXE, ULE & FXY: Uncle Buck is once again heading toward a world of hurt.

 

GLD: Lots of intrigue and rumors of manipulation by TPTB to keep a lid on prices. Frankly, if we head to a recession and the Fed or Treasury employ more quantitative easing strategies gold would rally one would think.

 

DBC: Commodity markets saw most of the action Thursday no matter the sector.

 

$WTIC/CRUDE OIL & XLE: Even XOM which knocked the stuffing out of estimates fell on the day Thursday.

 

DBB: The action in base metals is impressive and sends a message of increasing demand most likely from China.

 

XME: If base metals continue to rise, dip buyers should be active in XME.

 

DBA & JJG: Big rally in grains underway on rumors of crop problems in Europe and Russia on drought pushing prices higher. At the same time it doesn't hurt prices that the dollar is weak. My primary source indicates this is all conjecture.

Continue to Overseas & Emerging Markets

EFA: European markets were higher as was the euro which would help holders in the U.S. but Thursday wasn't a winner.

 

EEM: Stalling at higher levels helped by commodity prices but held back by gravity.

 

EWJ: It seems like we've been at this level a gazillion times but here we are. Every time I complain about EWJ it does something spectacular.

 

EWY: All week we've been flirting with both sides of resistance.

 

EWA: Yeah, I need a new song with better lyrics.

 

EWC: If it ain't changing why should I say something different or novel?

 

EWZ: Brazil is loaded with raw materials (as if you didn't know) and when demand increases there so too will EWZ.

 

RSX: Russian stock indexes were pumped higher on rising commodity prices.

 

EPI: Nothing new to add to previous comments.

 

FXI: The above annotation speaks volumes.

 

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.

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. Plenty of re-accumulation occurring.

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

Markets are limping into the close of July which still remains a good month overall. Volume is depressingly light and calls into question rallies since most of the action seems as traders just picking each other's pockets. But, much of this light volume may be due to an ICI report showing equity mutual funds saw their 12 th sequential outflow of funds--$1.5 billion--this while markets advanced nearly 10%. So, who are we kidding here? It's just trading desks, a few HAL 9000s and some hedge funds accounting for all the action.

Late today ORCL was sued by the U.S. government alleging fraud but I don't see much action in the stock after the close. Further, news has just been released that Google's ads are being blocked in China and the stock immediately traded lower late.

Friday is the last day of trading for July. We'll get plenty of market moving economic data, not to mention more earnings. August is shaping up as an adventure in light volume.

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: GLD, UDN and ULE.

 

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 .