Bulls Take The News They Like: Dave's Daily



 

This morning markets were lower as news from the eurozone returned to haunt markets. Posted last week was German Factory Orders of -4.8% which many inferred would lead to a German recession. Bulls, what there are of them, ignored that to push markets (S&P 500) to fresh highs. Wednesday came news from Germany (B still follows A methinks) that exports were much lower. This put the euro lower testing ¿126 before recovering late in the day. However, the German DAX Index also lower much of the day hardly budged.

Stocks in the U.S. opened lower and stayed down much of the day until the Green Beige Book was released indicating late 2011 economic growth. That got the 2:15 PM Buy Program Express launched. So stocks rallied late because...well, because they did. With SPX new highs more money automatically comes in to keep things going. Some explain a rally by low PEs. The trailing PE on SPX is now is at 13x which is low but not historically so.

Forward earnings are what matters now but many companies and analysts are lowering forward views. With the eurozone hanging over the market's head bulls still see U.S. stocks as cheap. Bulls are thrilled a global stimulus is in the works. China is easing rates (Shanghai Index up 6% in 3 days) and so is the ECB. Further, many expect Bernank & Co to launch QE3 if it's not already in stealth mode. Global monetary authorities are anxious to reflate and that can get out of hand naturally. But, with political pressures building it's easy to keep kicking the can down the road to save their jobs.

So even as the euro was weak gold rallied Wednesday--easy money from monetary authorities makes gold look better. However, oil prices fell on supply data (plus 5M bbls) not to mention German economic data. The dollar was stronger naturally and bonds fell.

Volume remains ultra-light still meaning the market is being played only by the HFTs in my opinion. Breadth per the WSJ was positive and we're short-term overbought.

 Follow our pithy comments on twitter and join the conversation with me on facebook.

SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

IWM - The iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the small capitalization sector of the U.S. equity market as represented by the Russell 2000 Index. The index represents the approximately 2,000 smallest companies in the Russell 3000 Index.
See more details

QQQ - is an exchange-traded fund based on the Nasdaq-100 Index ®. The Fund will, under most circumstances, consists of all of stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The portfolio is rebalanced quarterly and reconstituted annually. See more details

Continue to U.S. Sector, Stocks & Bond ETFs

IGN - The iShares S&P North American Technology-Multimedia Networking Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S.-traded multimedia networking stocks as represented by the S&P North American Technology-Multimedia Networking Index¿.
See more details

XBI - The SPDR® S&P® Biotech ETF, before expenses, seeks to closely match the returns and characteristics of the S&P Biotechnology Select IndustryTM Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

KBE - The SPDR® S&P® Bank ETF, before expenses, seeks to closely match the returns and characteristics of the S&P® Banks Select Industry Index (ticker: SPSIBK). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

KRE - The SPDR® S&P® Regional Banking ETF, before expenses, seeks to closely match the returns and characteristics of the S&P® Regional Banks Select Industry Index(ticker: SPSIRBK). Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

XLF - The Financial Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Financial Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

XLB - The Materials Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Materials Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

XLI - The Industrial Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Industrial Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

IEF - The iShares Barclays 7-10 Year Treasury Bond Fund seeks to approximate the total rate of return of the intermediate-term sector of the United States Treasury market as defined by the Barclays Capital U.S. 7-10 Year Treasury Bond Index.
See more details

CVY - The Guggenheim/Zacks Multi-Asset Income Index ETF (NYSE:CVY), the "Fund", seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called the Zacks Multi-Asset Income Index (the "Zacks Multi-Asset Income Index" or "Index"). The Fund expects to use a sampling approach in seeking to achieve its objective.
See more details

PFF - The iShares S&P U.S. Preferred Stock Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P U.S. Preferred Stock Index.
See more details

Continue to Currency & Commodity Market ETFs

UUP - The PowerShares DB US Dollar Bullish Fund (Symbol: UUP) is based on the Deutsche Bank Long US Dollar Index (USDX®) Futures Index¿ (DB Long USD Futures Index). The Index, which is managed by DB Commodity Services LLC, is a rules-based index composed solely of long USDX® futures contracts. The USDX® futures contract is designed to replicate the performance of being long the US Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.
See more details

FXE - CurrencyShares Euro Trust is designed to track the price of the euro net of Trust expenses, which are expected to be paid from interest earned on the deposited euros.
See more details

FXB - CurrencyShares British Pound Sterling Trust is designed to track the price of the British Pound Sterling net of Trust expenses, which are expected to be paid from interest earned on the deposited British Pound Sterlings.
See more details

 

FXY - CurrencyShares Japanese Yen Trust is designed to track the price of the Japanese Yen net of Trust expenses, which are expected to be paid from interest earned on the deposited Japanese Yen.
See more details

GLD - The objective of the SPDR® Gold Trust¿ is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses.
See more details

GDX - The Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Gold Miners Index. The Index provides exposure to publicly traded companies worldwide involved primarily in the mining for gold, representing a diversified blend of small-, mid- and large- capitalization stocks. As such, the Fund is subject to the risks of investing in this sector.
See more details

SLV - The objective of the iShares Silver Trust is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.
See more details

DBB - The PowerShares DB Base Metals Fund (Fund) is based on the Deutsche Bank Liquid Commodity Index - Optimum Yield Industrial Metals Excess Return¿ (Index) and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely used base metals - aluminum, zinc and copper (grade A). The index is intended to reflect the performance of the industrial metals sector. You cannot invest directly in an index. Ordinary brokerage commissions apply.
See more details

JJC - The Dow Jones-UBS Copper Subindex Total ReturnService Mark is a sub-index of the Dow Jones-UBS Commodity Index Total ReturnService Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.
See more details

DJP - The iPath® Dow Jones-UBS Commodity Index Total ReturnService Mark ETN is linked to the Dow Jones-UBS Commodity Index Total ReturnService Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The commodities represented in the Dow Jones-UBS Commodity Index Total ReturnService Mark are rebalanced annually; however, the weightings fluctuate between rebalancings due to changes in market prices.
See more details

USO - The United States Oil Fund, LP ("USO") is a domestic exchange traded security designed to track the movements of light, sweet crude oil ("West Texas Intermediate").
See more details

UGA - The United States Gasoline Fund LP (UGA) is an exchange traded security that is designed to track in percentage terms the movements of gasoline prices.
See more details

UNG - The United States Natural Gas Fund LP (UNG) is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices.
See more details

XLE - The Energy Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Energy Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
See more details

DBA - The PowerShares DB Agriculture Fund is based on the Deutsche Bank Liquid Commodity Index Diversified Agriculture Excess Return¿ and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. The Index is intended to reflect the performance of the agricultural sector. You cannot invest directly in the Index. Ordinary brokerage commissions apply.
See more details

Continue to Overseas Sectors & ETFs

EFA - The iShares MSCI EAFE Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the European, Australasian and Far Eastern markets, as measured by the MSCI EAFE Index.
See more details

EEM - The iShares MSCI Emerging Markets Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index.
See more details

EWJ - The iShares MSCI Japan Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Japanese market, as measured by the MSCI Japan Index.
See more details

EIS - The iShares MSCI Israel Capped Investable Market Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI Israel Capped Investable Market Index.
See more details

EWY - The iShares MSCI South Korea Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the South Korean market, as measured by the MSCI Korea Index.
See more details

EWG - The iShares MSCI Germany Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the German market, as measured by the MSCI Germany Index.
See more details on sponsor's website

EWZ - The iShares MSCI Brazil Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Brazilian market, as measured by the MSCI Brazil Index.
See more details

RSX - The Russia ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal® Russia+ Index. The Index provides exposure to publicly traded companies that are domiciled in Russia, and traded in Russia and/or on leading global exchanges. As such, the Fund is subject to the risks of investing in this country.
See more details

EPI - WisdomTree India Earnings Fund seeks investment results that correspond to the price and yield performance, before fees and expenses, of the WisdomTree India Earnings Index.
See more details

FXI - The iShares FTSE China 25 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE China 25 Index.
See more details

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

Here's the deal in a nutshell: there is global money printing going on to boost asset prices particularly in an election year. All politicians have embraced Keynes as their salvation even if their easing will get out of control. Since the end of the Eisenhower administration the buying power of $1.00 is equal to $7.46 in 2011. And since the Bretton Woods agreement $1.00 has the same buying power as $5.51 in 2011. That's what Keynesian policies yield and is why investors have purchased gold and will continue to do so.

Thursday will be Jobless Claims, Retail Sales, Bloomberg Consumer Comfort Index and Business Inventories. And, we will be given a respite from Fed governors campaigning for their policies although Lacker and Evans speak on Friday.

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. Active Portfolios: No Positions. Our Lazy & Hedged Lazy Portfolios maintain the follow positions: XBI, QQQ, QLD, XLI, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, & EWU.

 

 

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.

If you liked this article you might like

Jim Cramer: Today Is Not Just About VIX, It Is About COMPANIES!

Jim Cramer: Today Is Not Just About VIX, It Is About COMPANIES!

Jim Cramer: The Government Should Admit It Goofed With These Crazy Instruments

Jim Cramer: The Government Should Admit It Goofed With These Crazy Instruments

Jim Cramer: The SEC Should Admit It Goofed With These Crazy Instruments

Jim Cramer: The SEC Should Admit It Goofed With These Crazy Instruments

Jim Cramer: I Remember Earnings

Jim Cramer: I Remember Earnings

Dow Soars Over 250 Points to Post Its Fourth Straight Day of Gains