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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
It was an interesting day in many ways. The euro zone is "fixed" rally was impressive that's for sure despite the lack of details, and as the FT noted, things weren't nailed down yet. But the buy programs hit the tape and away we went. The most worrisome thing is how overbought we are just on a short-term basis. The trusty NYMO rarely gets above 100 but I've seen it there a few times. The other thing that stares you in the face is how highly correlated all these markets are away from bonds and perhaps currencies. It seems when the "risk on" trade is present you only need to buy one security with the highest beta (volatility measure) and not bother with doing anything more thoughtful. This is the result of easy money policies globally and how integrated the world has become. Friday we get more earnings and economic data led by Personal Income and Outlays, the Employment Cost Index and Consumer Sentiment. The latter doesn't seem that reliable. 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: USD, SPY, RSP, VTI, IWM, XLY, XLK, KBE, KRE, EUM, SH, EFZ, 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 .