Does This Relief Rally Have Legs?
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October 17, 2014

10-17-2014 8-18-06 PM relief

Stocks were sharply higher across the board Friday as investors bought shares. The reasons were stocks were much oversold and plenty of “we might extend QE” and the “ECB might start QE next week” rumors were circulating.

The primary worries affecting markets weren’t resolved by this rally and markets still closed lower on the week.

One of the more remarkable comments on the week was uttered by Fed Chain Janet Yellen who complained in a Boston speech this morning that “Earnings inequality over the past several decades greatly concerned me.” This is a remarkable statement when the primary reason for earnings inequality can first be blamed on Fed policies for causing and enhancing income inequality. Others remarked about this here.

Leading market sectors higher included: S&P 500 (SPY), Tech (QQQ), Dow (DIA), Financials (XLF), Materials (XLB), Industrials (XLI), Transports (IYT), Energy (XLE), Healthcare (XLV), Consumer Discretionary (XLY), Biotech (IBB), Homebuilders (ITB), REITs (IYR), China (FXI), Brazil (EWZ), EAFE (EFA), Japan (EWJ), Europe (VGK), Germany (EWG), UK (EWU), Emerging Markets (EEM), The Dollar (UUP), Crude Oil (USO) and many more.

Leading market sectors lower included: Small Caps (IWM), Taiwan (EWT), Bonds (TLT), Euro (FXE), Yen (FXY), Gold Stocks (GDX), Natural Gas Producers (FCG), Coal (KOL), Silver (SLV) and Natural Gas (UNG).

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

10-17-2014 8-19-54 PM Diary

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPY DAILY

    SPY DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU DAILY

    INDU DAILY

  • INDU WEEKLY

    INDU 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

Depending on your point of view, we either are on the way to putting recent declines in the rear view mirror and starting the obligatory fourth quarter rally or Friday was just an oversold relief rally full of sound and fury, meaning nothing.

I have to post a short commentary today given other commitments.

For members, we’ll hash everything out over the weekend but my opinion is the market has a ways to go to prove itself, and so does the Fed.

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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