Investors must be looking ahead to good employment reports to bid markets higher. Further, let's face it, it's the end of the quarter and there's some window dressing in place. Monday's volume was pathetic and Tuesday wasn't much better. The "bad news is good and good news is better" theme remains dominant. With the former, interest rates will stay low when the news is poor such as with today's crummy Consumer Sentiment report which was described by some bulls as not being "worse than feared". But, even if so, bulls like the poor news since the theme remains in place.

Other than Consumer Sentiment there was little news other than Home Depot will buy back some outstanding shares.

Commodity prices like bad news as well since their rise means continued easy money policies.

The most meaningful information comes from our own Federal Reserve in St Louis. The chart below shows the massive amount of liquidity, $500 billion since the beginning of 2011, the Fed has added to the system. This is probably all you need to know why stocks overall are rising.

Volume remains quite low which has been this rallies signature since Labor Day--low volume rallies, high volume sell-offs. Breadth per the WSJ 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.

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

Yes, we're seeing some window dressing and tape painting on light volume. It's pretty transparent.

There's only one thing you need focus on, the above chart showing the $500 billion injected into the system since January 2011. That's the story in a nutshell. A more money than brains market.

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: TLT, UCO, DGP, GAZ, XLE, GLD, SLV, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, BWD, GXG, THD, AFK, BRAQ, CHIQ, TUR, & VNM


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 .

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.