ETF Midweek Peek

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By David Gillie

NEW YORK ( ETF Digest) -- This week had a light calendar of economic data neither spurring or scaring investors. The long awaited Greek default is now behind us relieving some market anxiety. For now, the media has turned its head from Europe and Iran to Apple (AAPL) and an exuberance not seen since the dot-com euphoria.


Although, the story being told currently tries to allude to "all the bad news is behind us," investors are nervously in a hold pattern and volume (or lack of) indicates little enthusiasm of new money coming into the market. Nevertheless, the market seemingly wants to continue to melt up despite the lack of participation.



Algorithm programs appear to be tuned to an upside (buy) bias and anemic volume offers little resistance. However, this same lack of resistance could also apply if the down lever gets pulled and would have the trust behind it of traders wanting to take gains off the table.


Top Performers This Week


Our top two performers this week are in direct contrast with one another -- 2x long volatility (TVIX) and the inverse volatility index (XIV). This is highly unusual and peculiar. Relative volume still gives a bias to the inverse volatility camp, but that may also be due to traders having already positioned themselves in the long volatility camp. An extreme pop in Treasury yields drove the Treasury bears to our top performer table this week. Treasuries quickly went into an oversold condition. A radical change is that everything Apple-related topping the chart last week has dissipated and only the mega bull tech ETF remains at the No. 10 position.


This is a table riddled with conflict. As the safe haven of treasuries declines, the fear factor of volatility has increased. One of these will have to prevail.


New Highs

A single day selloff pulled the Dow down 200 points. Prior to that, the new high table was limited to 10 positions but actually had nearly tripled that amount. As we see, those new highs had not recovered and only Consumer Discretionary makes a new high this week. Much of that has to do with higher cable costs.


New Lows

Volatility dipped to new lows not seen since the pre-crash days. When TVIX became a crowded trade, traders went to the more thinly traded UVXY and just as quickly bailed on these positions as many ETNs (non-monetary holding based) do not track their indices directly.


Unusual Volume

As quickly as traders piled into UVXY as an alternative to TVIX, they bailed out with a vengeance as the trade turned against them. This is an ideal example of how ETNs can vary widely from their indices. Both TVIX and UVXY are leveraged VIX ETNs, yet UVXY had a dramatic fall that TVIX didn't suffer.


Since the market was going up, traders bought "the market" (VOO). This is basically a free ticket on the ride without the greater risk of sector/industry analysis. It also allows for an easier exit in market weakness.


Natural Gas gets attention as price dropped to levels nearly making it unprofitable to produce. The thinking is "it can't get any lower." Perhaps natural gas is building a base, but that is not necessarily an assurance of it having a dramatic rise.


Home construction regained its footing largely on materials suppliers such as Home Depot.


Overbought


Ticker

Company

Perf Week

52W High

RSI

Rel Volume

Price

XLK

Technology Select Sector SPDR

1.25%

-0.33%

78.97

0.65

30.07

QLD

ProShares Ultra QQQ

2.97%

-0.09%

78.86

1.05

117.51

TQQQ

ProShares UltraPro QQQ

4.45%

-0.11%

78.83

1.03

117.52

TYH

Direxion Daily Technology Bull 3X

5.08%

-0.70%

78.63

0.72

64.28







 

Our overbought table offers some interesting insight into traders positioning. The top three overbought position are well off their 52-week highs. This is a "chased rally" situation with traders looking to long positions with room still left to move as the general market gets toppy.

As long as AAPL remains a "must buy", the Nasdaq will remain overbought.


Trending Up

As the VIX remains in a comatose condition, its inverse continues to rise. Financials broke out with a resolve in Greece as well as, Germany. AAPL takes the Nasdaq and tech for a free ride.

Most of these upward trending positions are nearing overbought territory, but are still well off their highs.


Trending Down



Gold miners have been in a descending channel since September. Pops in gold still haven't been able to break this long downward trend. FXE will be important to watch. Although still within its descending channel, the pattern has taken a recent bullish bias. Commodity indices have suffered under the Dollar at recent highs. Although crude futures remain elevated, oil services has not kept pace. Generally speaking, many of these downward trending positions are nearing their 52-week low support levels.

The market has delivered a reliable pattern over the past few weeks of all dips being bought back within a day or so. Intraday trading has been almost too predictable with a some QE buy or good news from the media in late morning saving selling at the open. Afternoon sessions have been sleepers with the dependable buying the close. As much as traders like predictability, the market likes complacency to take their money.

Watch treasuries, the VIX and the euro for a "behind the scenes" look at the S&P500 price.

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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.