Financials Lay an Egg: Dave's Daily

If I don't post every day it's easy to forget how the routine goes, but that's not your problem. Anyway, most disappointment Wednesday surrounded financials and perhaps materials. Investors were pretty energized regarding bank prospects but were disappointed with GS and AXP reports. The DJIA was propped higher by IBM's earnings keeping in mind it's a "price weighted" index with the company being the big dog there. Oddly, the rest of the tech sector saw sharp declines led by semis and networking.

Commodity markets were mixed to down on the day while the dollar sold-off. Bonds rallied some as stocks were lower and home building data was weak.

Volume continues to be incredibly light and it's hard to put your finger on why. Connected obliquely was news that hedge fund assets reached and exceeded their prior highs now at $1.9 trillion. With an unknown percentage of these assets involved in HFT (High Frequency Trading) it only enhances the impact of this activity.

As some may know we utilize DeMark indicators to assess timing exits from long or short positions. DeMark is usually quiet but today he posted a note suggesting an "imminent" decline in markets was at hand. With POMO ongoing ( more today) it's the wind behind bulls' sails that could defeat many technical indicators.

In any event, volume picked up on selling while breadth was decidedly negative 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

Earnings continue to roll-in with EBAY reporting good earnings but most others disappoint. You can see the after-hours action here:

So, as you drive home from work and listening to stock market reports you'll probably get the news of EBAY's results but little else. It's that media "bullish bias" at work. But, don't be fooled by the one winner given poor results separately.

Tech in particular had a poor day Wednesday with networking and semis especially hard hit. They may have just run too far too fast and selling earnings news may be upon us.

Thursday is Jobless Claims once again and Friday is options expiration which given the strong run higher should prove interesting. More earnings will be featured and closely scrutinized led by Morgan Stanley, Union Pacific and Google among others.

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: XLF, TBF, DJP, IAU, SLV, DBA, EFA, VWO, EWG, EWU 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 .

 

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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