Is Uncle Buck Back?: Dave's Daily

The "change in season" described as the theme of yesterday's post continued Wednesday at a more modest pace. Even Bucky is rallying some as better economic data (ADP Employment Data) make it more attractive than even gold and other alternatives. Is this a temporary phenomenon? Perhaps since hopes for a cure to U.S. deficit issues remain a pipedream. But, clearly better economic data is taking hold which could lead to better tax receipts but also quickly raise interest rates--a killer for some commodity prices, particularly precious metals. If there is better growth, industry will need materials and commodities.

The "bear raid" on precious metals continued today but gold held at support levels and recovered.

Stock bulls have the future baked-in to prices and we're much overbought now from a variety of perspectives. A little slowdown would help along with some serious volume. If the latter doesn't materialize there's a lot of air under current prices which could lead to a smackdown.

Volume remains light and breadth positive per the WSJ.

Continue to U.S. Sectors, Stocks & Bonds

Continue to Currency & Commodity Markets

Continue to Overseas Markets & ETFs

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.

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

Is this great reversal of sentiment durable? It's not surprising to see reversals of major trends from one New Year to the next. It's happened a lot when some markets are much overextended. But the theme that's taking hold now is better economic data is on the way (if you don't look at housing and the overall employment picture). This is helping sentiment and stock prices. Unfortunately there still is little volume which is "the" missing link.

Thursday we get Jobless Claims and wrap up the week Friday with the all important Nonfarm Payrolls report.

I may do something more on bonds tomorrow as we await Friday's report.

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: SPY, VTI, RSP, IWM, QQQQ, XLI, FAS, IAU, SLV, DBB, DBA, EFA, VWO, EWJ, EWY, EWA, EWY, EWC, EWZ & 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 .

 

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.

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