Simon Says Buy Buy Buy
0
October 23, 2014

10-23-2014 8-06-28 PM Buy

Most of the fears hurting stock prices faded Thursday as global economic data improved enough to put recessionary fears to rest for now. China’s PMI rose to 50.4 vs 50.2 expected; German Manufacturing rose to 51.9 vs 49.9 expected; Eurozone PMI 50.7 vs 49.9 expected & prior 49.9; U.S. PMI Mfg Index Flash fell 56.2 vs 57 expected & prior 57.9; FHFA House Price Index 0.5% vs 0.3% expected & prior 0.2%; and, Jobless Claims rose to 283K vs 285K expected & prior 266K.

The Dow, for example was up nearly 300 points when news broke of another Ebola victim being rushed to a hospital in NYC. Immediately the Dow surrendered roughly 80 points which shows how unstable conditions can become. After the close, earnings from Amazon (AMZN) saw the stock drop over 10% while Pandora (P) dropped nearly 8%. Winners included Microsoft (MSFT) which rallied over 3% after its earnings and Pfizer (PFE) where shares rose modestly due to an $11 billion share buyback announcement. Speaking of buybacks, Caterpillar (CAT) took first prize with a $2.5 billion share buyback in the last quarter which helped greatly boost earnings to $1.72 vs $1.35 estimated on fewer shares thus beating estimates. So management grows earnings per share by presumably taking advantage of ZIRP to borrow cheaply to buy back shares but do little to actually grow the company. Financial engineering has been the primary beneficiary of Fed policies.

10-23-2014 7-48-35 PM C10-23-2014 7-50-16 PM CAT

10-23-2014 7-51-11 PM C3

We shouldn’t dwell on what companies are doing since the tape action is doing all the talking. As an afterthought, we should point out MSFT’s gains were based on gains from their cloud products. This commentary is made short today since we spent over 5 hours on the phone with MSFT support in India trying to figure out how to use the product properly after the purchase. Be forewarned!

Leading market sectors higher included: Just about everything.

Leading market sectors lower included: Bonds (TLT), Gold (GLD) and the Yen (FXY)                                                                     

The top 20 market movers by percentage change in volume whether rising or falling is available daily.

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Volume was above average and breadth per the WSJ was positive.

10-23-2014 7-52-50 PM Diary

 

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPX WEEKLY

    SPX WEEKLY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • NYMO DAILY

    NYMO  DAILY

    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.

  • NYSI DAILY

    NYSI DAILY

    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.

  • VIX WEEKLY

    VIX WEEKLY

    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.

Closing Summary

Like I said, after spending hours on the phone with Microsoft support in India, this is all the time and energy I’ve got to do anything more than the basic view.

Thursday revealed a true buying panic until the NYC Ebola scare arrived late enough collapse liquidity and bullish enthusiasm. But economic data was in a Goldilocks environment as economic data was better but not overly so.

The only economic indicator Friday is important New Home Sales which is estimated to be around 460K units a large drop from previous reading of 504K.

Let’s see what happens.

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...

Headshot David Fry xsmall

Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.

He is the author of "Create Your own ETF Hedge Fund: A Do-It-Yourself Strategy for Private Wealth Management" published by Wiley Finance and "The Best ETFs: U.S. Equities, A Companion Guide to Building Your ETF Portfolio".



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Disclaimer: The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell only any security. Market sectors and related ETF's 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 annotation's 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

 

ETF Digest

Market Summary
NYSE Composite Index S&P 500 Index Nasdaq Composite Index Russell 2000 Small Cap Index NYSE Composite Index S&P 500 Index Nasdaq Composite Index Russell 2000 Small Cap Index 10 Year Treasury Note Yield Gold Bugs Index Morgan Stanley High Tech 35 Index Market Chart
Commodity Quote Change Change % NY
Gold1,234.101.200.10 % 04:34
WTI Crude Futr81.57-0.52-0.63 %03:55
Index Quotes Change Change % Local
CRB272.432.080.77 % 17:28
US Dollar85.960.000.00 % 17:00
Index Quotes Change Change % Local
VIX16.53-1.34-7.50 %10/23
MSCI Value Daily MTD YTD
Brazil1984.816-4.29 %-8.55 %-10.52 %
Russia569.579-1.03 %-6.80 %-27.62 %
India500.1160.29 %-0.10 %22.79 %
China62.200-0.41 %0.87 % -1.43 %