The First Quarter Gets Some Window Dressing: Dave's Daily

Economic data Friday was mixed and depending on your vision or bias was spun to suit. Personal Income & Spending was a dangerously mixed bag with income down and spending up: (Personal Income .2% vs .4% expected & prior .3%. Spending .8% vs .6% expected & .4% prior. Core PCE was .1% vs .2% prior). With spending up a good portion of this goes to food and energy excluded in the "core" PCE. Since the "core" stuff is what the Bernank et al focus on it will justify ongoing ZIRP and perhaps more QE. It's all contrived and absurd frankly.

Later the Chicago PMI (62.2 vs 63 expected & prior 64) also disappointed with a miss but bulls didn't mind.

Consumer Sentiment (76.2 vs 75 expected & prior 74.3) rose and beat estimates but also has a larger stock market component than does Consumer Confidence data released previously.

Bulls chose to embrace the spending side of data and Consumer Sentiment ignoring everything else.

Apple's (AAPL) share price declined on news that Google (GOOG) would be stepping up efforts to compete with Apple products like iPads and smart phones. Also much in the news was widely disseminated story that without the company's earnings first quarter EPS for the S&P 500 would be flat versus up 1.50%. So despite the heavy weighting of shares (15-20%) in many indexes, not mention hedge fund and institutional portfolios, the stock were sold Friday. This is sector rotation of a different kind. It may only have little to do with recent stories of company sweat shops in China.

Sectors and linked stocks leading markets higher included retail (LIZ & XRT), consumer discretionary (F & XLY), insurance (TRV & KIE), healthcare (HCA & XLV) and REITs (SPG & IYR) to name a few.

Gold (GLD) prices rebounded as the dollar (UUP) weakened. Grain (JJG & DBA) prices exploded higher on a large and unexpected drop in inventories. It's also the planting season and despite good weather and large planting estimates we now enter the more uncertain period of the year when future weather and other factors (disease, drought, rot and currency issues) come into play. Base metals gained slightly while crude oil and energy gained slightly. Bonds (IEF, TLT and LQD) saw more serious selling.

Volume was once again light even on this window dressing day. Breadth per the WSJ was mixed.

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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.
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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.
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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.
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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.
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XRT - The SPDR® S&P® Retail ETF seeks to replicate as closely as possible, before expenses, the total return performance of the S&P Retail Select Industry® Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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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.
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XLV - The Health Care Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Health Care Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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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.
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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.
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TLT - The iShares Barclays 20+ Year Treasury Bond Fund seeks to approximate the total rate of return of the long-term sector of the United States Treasury market as defined by the Barclays Capital U.S. 20+ Year Treasury Bond Index.
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LQD - The iShares iBoxx $ Investment Grade Corporate Bond Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the corporate bond market as defined by the iBoxx $ Liquid Investment Grade Index.
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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.
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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.
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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.
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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.
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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.
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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").
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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.
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JJG - The Dow Jones-UBS Grains 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. The Index is currently composed of three futures contracts on grains traded on U.S. exchanges.
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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.
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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.
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EEB - The Guggenheim/BNY Mellon BRIC ETF (NYSE:EEB), the "Fund", seeks investment results that correspond generally to the performance, before the Fund's fees and expenses, of an equity index called The Bank of New York Mellon BRIC Select ADR Index (the "BNY Mellon BRIC Index" or the "Index"). The Fund will normally invest at least 90% of its total assets in American depositary receipts ("ADRs") and global depositary receipts ("GDRs") that comprise the Index. Guggenheim Advisors, LLC (the "Investment Adviser").
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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

The markets closed the week higher overall but it seemed much more like a window dressing day than ever before. Apple met with some reality and that's about it.

Next week will feature primarily the employment report and the start of earnings season.

Let's see what happens.

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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 .

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