The rumor of a deal published in the Guardian sparked a sharp rally in U.S. equities in the afternoon. The assertions from the paper of the deal have been denied by both the Germans and French. From the article the point salient point: "The leaders of France and Germany hope to agree..." The deal, should it occur, creates a complex insurance plan outlined in the article but trashed by others as noted here. In the end, it has to be both approved and must work. The devil's in the details as usual. Now, I'm not smart or close enough to the insiders to know what the real deal is. All I know is the HFTs are "jumpy" and the algos are programmed to jump on any news like this from Europe. In the meantime the street was loaded with earnings news. Some were good and others loaded with accounting manipulations. Bank of America (BAC) led the way in confusion with gains from asset sales and other adjustments. After netting all this out it appears the company netted $.02 versus $.20 estimated while others thought it earned $.49. But there was enough confusion and with the stock oversold it rallied 10%. State Street (STT) reported a beat of $1.04 vs estimates of $.88 and it rallied as well taking financials higher. Goldman Sachs (GS) lost money for only the second time since it went public with earnings $-.84 versus -$.06 expected, but even with that the stock inexplicably rallied. One analyst from Barclays put this spin together: "...core metrics were in line or better than expectations, while the EPS miss was just a function of mark-to-market variations in the long dated portfolio during the quarter, should not be extrapolated into the future unless investors are making a market call." Got it?! Frankly, it's embarrassing. Remember, there has never been a durable bull market without financials taking part. Other earnings were from Coke (KO) which beat as international growth surged 17% versus 1% in the U.S. which shows you where the real action is. Harley Davidson (HOG), the ultimate working man's toy, reported strong earnings growth with earnings at $.81 versus $.74. Remember, like cars which are financed by the companies generally, these products are easy to finance and give some satisfaction and joy to users not seen in real estate for example. If things were so bad you'd think a cycle would be the first things crossed off the list. In tech, IBM's earnings were good but didn't beat so the shares were beaten up even with the rally. The company's stock had become seriously overbought and beating estimates becomes essential in these conditions. Yahoo (YHOO) reported earnings after the bell at $.21 cents net of charges beating estimates of $.17. Intel's (INTC) reported adjusted earnings of $.69 versus $.61 expected and offered a positive outlook. And, with a drum roll please, Apple (AAPL) missed with earnings of $7.04 versus $7.30 expected causing shares to slide 4% initially. Gold was down sharply early along with the euro but both battled back with the Guardian article of a euro zone "fix". Commodities were sharply higher then led by energy, base metals and agriculture. ( LATE BREAKING: Moody's just lowered Spain's debt two notches to A-1 with a negative outlook. This will stimulate a "deal" or undue today's madness.) Stocks reversed most of Monday's losses in this Turnaround Tuesday and volume was much higher abetted by a short squeeze. Breadth per the WSJ was quite positive. You can follow our pithy comments on twitter and join the conversation with me on facebook. Continue to U.S. Sector, Stocks & Bond ETFs
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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
To say the moves are fluid would be an understatement. Markets are pretty "jumpy" and it doesn't help that HFT algos are dominating conditions which is becoming a turn-off to investors. The reactions to earnings reports from Bank of America and Goldman Sachs are head-scratchers but this is the market we have. The after the close of markets of a miss from Apple, some retractions of the Guardian article and a Moody's downgrade of Spain should make Wednesday's trading interesting. Let's see what happens. Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current positions if any are embedded within charts. Our Lazy & Hedged Lazy Portfolios maintain the follow positions: QQQ, QLD, SH, EFZ, EUM, UUP, XLY, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, EWD, 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 www.etfdigest.com .