Central Banks Push Markets Higher: Dave's Daily

The previous theme over the past 3 years may be repeating as 2012 moves forward: "Bad news is good, good news is better". Of lying and willfully misleading investors is a path we shouldn't go down. The truth is the most thoughtful people involved with markets are being steamrolled by central bank liquidity. Whether it's the ECB, Bank of England, Bank of Japan, People's Bank of China or the U.S. Fed QE and ZIRP trump all other analysis.

If employment or eurozone conditions are weak you must put your mind with "Orwellian" thinking since bad news means more liquidity. Good news means good news and asset prices will inflate even more. The central bank punchbowl isn't going anywhere until perhaps May. Then there'll be more focus on the election and its aftermath. And, after the election the bills will come due, bond vigilantes will become more emboldened and government jobs -- including at the Fed and Treasury -- may be safe enough to make tougher choices.

Until this occurs you just can't use past experience to rationalize current market behavior beyond the printing presses. Even today a thoughtful economist has posited the notion the warm winter has enhanced economic growth.

Separately Greek PSI (Private Sector Investors) results, though premature until official report Saturday (naturally), states 80% or more of these investors are willing to accept 30% on their money in a swap. How is this a good thing actually? After all, investors here could include pension plans, charitable foundations and other entities negatively affecting their beneficiaries.

What does this settlement portend for Portugal, Spain, Italy and beyond? Are they all going to experience these structural defaults? ECB head Draghi states the collateral they're receiving from Greece and other indebted countries in the eurozone is of "high quality". (Puhleeze!) So many PIG countries are just going the way of Argentina and Ecuador in stiffing their creditors and this is believed a good thing.

Jobless Claims Thursday were weaker than expected (362K vs 351K expected and prior revised higher to 354K). Did you know that prior weekly Jobless Claims data has been revised higher 100% of the time over the past two years? How does that happen this consistently?

German Industrial Production improved which surprised markets since just two days prior the PMI was quite weak. Anyway, the last data is what bulls are focused on. The Germans will have a lot of Europe to carry on their backs, much more than just assimilating East Germany as was done two decades previously.

So you think me a bear? Personally I sure am, but we're long overall and that's our job, but I don't have to like it either.

As has been typical for recent melt-up days, volume remains ultra-light and perhaps constrained by those waiting for Friday's employment report. Breadth per the WSJ was positive.

You can follow our pithy comments on twitter and 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 - PowerShares Capital Management LLC is passionate about our goal of delivering the highest quality investment management available through one of the more benefit-rich investment vehicles ever created, the exchange-traded fund.PowerShares QQQ¿, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", 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

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

SOXX - The iShares PHLX SOX Semiconductor Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S.-listed semiconductor stocks as represented by the PHLX Semiconductor Sector Index ("the Index").
See more details

XLY - The Consumer Discretionary Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Consumer Discretionary 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

IYR - The iShares Dow Jones U.S. Real Estate Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, to the performance of the real estate sector of the U.S. equity market, as represented by the Dow Jones U.S. Real Estate Index.
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

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

HYD - The High-Yield Municipal Index ETF (HYD) seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Barclays Capital Municipal Custom High Yield Composite Index. HYD is the nation's first ETF to focus on high-yield munis, and tracks an index that has a 25% weighting in investment-grade triple-B bonds and 75% weighting in non-investment grade bonds. In addition, 75% of the index is in bonds issued as part of transactions of at least $100 million in size.
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").
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.
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

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

GDXJ - The Junior Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Junior Gold Miners Index. The Index provides exposure to a global universe of publicly traded small- and medium-capitalization companies that generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company's revenue from gold or silver mining when developed, or primarily invest in gold or silver.
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


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.
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

IXC - The iShares S&P Global Energy Sector Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of companies that Standard & Poor's deems part of the energy sector of the economy and important to global markets, as represented by the S&P Global Energy Sector Index. The index is a subset of the Standard & Poor's Global 1200 Index.
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

EZU - The iShares MSCI EMU 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 Monetary Union (EMU) markets, as measured by the MSCI EMU 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

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

EWI - The iShares MSCI Italy 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 Italian market, as measured by the MSCI Italy Index.
See more details

EWP - The iShares MSCI Spain 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 Spanish market, as measured by the MSCI Spain 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

EWS - The iShares MSCI Singapore 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 Singaporean equity market, as measured by the MSCI Singapore Index.
See more details

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

After the close of trading Texas Instruments (TXN) guided lower once again but the stock barely budged which was strange. Green Mountain Coffee (GMCR) dropped 15% as Starbucks (SBUX) looks to horn-in on their business.

Friday will bring us the all-important Employment Report. Expectations are for 204K-233K new jobs added with the unemployment rate staying the same, 8.3%. That should put a bow on the week for bulls or not.

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: Lazy & Hedged Lazy Portfolios maintain the follow positions: 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 .