There has been a long string of crummy economic data which has largely been ignored (“bad news is good”) by bulls. However, on Friday, bulls jumped on two reports, Leading Indicators and Consumer Sentiment, which released better than expected results (“good news is great”). The most noteworthy regarded the Consumer Sentiment report, which was the largest "beat" in its history. For the most part, the Consumer Sentiment report is less regarded by us than the Conference Board’s Consumer Confidence report since the former is heavily weighted by stock prices. With a rally in stocks, Consumer Sentiment data was likely to beat. And, given that, they tend to feed off each other.
In other news, there wasn’t any slowdown in QE on Friday, with a large POMO action pumping a cool $5.3 billion into the markets, along with options expiration, which generally creates more volatility. We have just another week or so of earnings news left for the first quarter, and as a result, there's not much left from the sector to support prices.
It’s a “risk on” environment for global equities. This is especially so for countries and regions where central banks are busy printing money. For “risk off” sectors, bonds and commodities are not feeling the love. And, those countries not in the QE game, Latin America and Australia for example, their markets are underperforming.
The dollar (UUP) rose substantially Friday as the euro (FXE) and yen (FXY) especially were weak. The strong dollar caused further selling in gold (GLD) and other commodities (DBC), while oil (USO) climbed higher. Though on a Friday, the latter isn’t unexpected with the Middle East still at a boil. Bonds (TLT) fell back as stocks rallied.
Leading equity sectors? Pick one, as everything jumped higher across the board. Lagging were Latin America (ILF) and Australia (EWA).
We’ve focused our ETF positions on sectors within the major indexes rather than the large indexes in isolation largely because we believe that these sub sectors can outperform the major indexes.
Volume was only slightly higher perhaps due to options expiration toward the close. Breadth per the WSJ was positive.
That was the week that was to quote the old TV series. Markets are quite speculative now and the game is being played by hedge funds, banks and overseas investors with free money from the Fed. It’s almost like musical chairs, for when the music stops there will be trouble. This is why you see so much QE pause/start rhetoric which is field testing investor behavior.
Aside from light volume there’s no argument with the tape. It’s quite positive but much overbought. Earnings news is beginning to wane leaving less for bulls to respond to. Many previous reliable technical indicators are succumbing to all the money printing. Looking at those markets where QE is not taking place perhaps reveals the real market conditions.
Next week will yield Fed Minutes, housing data and Durable Goods Orders.
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 “trading” positions in active portfolios 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.
New subscribers wanting to join in with existing positions are cautioned that mature positions may have stop-loss points may result in losses to them while the ETF Digest's position may only experience a reduction in profits.
There can be substantial risk of loss in trading stocks. You should, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. In deciding to trade stocks, you should be aware of the following:
You may sustain a total loss of the stock value and of all transaction costs. This statement and this web site cannot disclose all the risks and other significant aspects of the stock markets or the use of our signals.
If you engage in margin trading and the market moves against your position, you may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account.
Under certain market conditions, you may find it difficult or impossible to liquidate a position. The placement of contingent orders by you or your trading advisor, such as a "stop loss" or "stop limit" order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execrute such orders.
No representation is being made that any stock trading account will or is likely to achieve profits or losses similar to those shown. Hypothetical stock trading does not involve financial risk, and no hypothetical stock trading record can completely account for the impact of financial risk in actual stock trading. For example, the ability to withstand losses or to stick to a particular trading program in spite of trading losses are material points which can also adversely affect actual stock trading results. There are numerous other factors related to the stock markets in general or to the implementation of any specific stock trading program which can not be fully accounted for in the preparation of hypothetical stock trading performance results, and all of these factors can adversely affect actual stock trading results.
The use of the Internet to transmit and receive information creates additional risk. The ETF Digest will attempt to post signals on the web site. However, The ETF Digest cannot be responsible for delays in transmitting the information described on this site resulting from problems with Internet connectivity, either your or our own, or by slowdowns of Internet transmittal of information.
The information provided by The ETF Digest is based on sources believed to be reliable, but it is not guaranteed to be accurate. There is no guarantee that the recommendations of The ETF Digest will be profitable or will not be subject to losses. The information provided by The ETF Digest is not a recommendation or a solicitation that any particular investor should purchase or sell any particular security in any amount, or at all. The investments discussed or recommended herein may be unsuitable for investors depending on their specific investment objectives and financial position. At any time TechInvest Inc. and its principals may maintain positions that are contrary to positions announced within the subscription service. In no event will The ETF Digest be liable to you or anyone else for any incidental, consequential, special, or indirect damage (including but not limited to lost profits or trading losses).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
|WTI Crude Futr||95.51||-0.51||-0.53 %||07:46|
|US Dollar||84.10||-0.16||-0.18 %||00:48|
|Brazil||2674.13||0.36 %||-1.47 %||-1.96 %|
|Russia||762.88||1.57 %||0.27 %||-5.53 %|
|India||447.31||0.21 %||2.65 %||4.02 %|
|China||61.39||0.01 %||1.17 %||-2.33 %|