Market Swoon A Quick Memory
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October 21, 2014

10-21-2014 5-56-32 PM reboot

The market’s rally has quickly overwhelmed recent oversold conditions.

That’s not to say we’re at new highs but the change in trend was quick enough to send conditions to short-term overbought. What caused all this joy on Wall Street? Naturally, it’s the season for one reason but more significant was news from China that the GDP in China improved to unexpected levels at 7.3% vs 7.2% expected. Further Industrial Production (8%) and Retail Sales (11.6%) both improved. Naturally, in the bizarro land of today China stocks declined because, you guessed it, there won’t be any stimulus. And, wonder of wonders, the ECB started some, as in timid, buying of European sovereign bonds from France, Spain and Italy. (The Germans must be so pleased.) Given the wonders of QE, European stocks rose, in some cases, sharply.

In the U.S. investors were cheered by all this overseas goodness. Making conditions even better were Existing Home Sales (5.17M vs 510M expected & prior 505M) which added to the bullish festivities. A more down to earth or sobering piece of news is the Fed chart below outlining debt to GDP.

10-21-2014 7-04-26 PM FRed

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

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10-21-2014 7-05-35 PM Diary

 

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

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  • NDX WEEKLY

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  • XLE WEEKLY

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  • XRT WEEKLY

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  • SMH WEEKLY

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  • IBB WEEKLY

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  • ITB WEEKLY

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  • IYR WEEKLY

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  • IYT WEEKLY

    IYT  WEEKLY

  • TLT WEEKLY

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  • UUP WEEKLY

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  • FXE WEEKLY

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  • FXY WEEKLY

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  • GLD WEEKLY

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  • GDX WEEKLY

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  • SLV WEEKLY

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  • JJC WEEKLY

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  • USO WEEKLY

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  • DBC WEEKLY

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  • EFA WEEKLY

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  • EEM WEEKLY

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  • IEV WEEKLY

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  • EWG WEEKLY

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  • EWU WEEKLY

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  • EWZ WEEKLY

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  • RSX WEEKLY

    RSX WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • PEK WEEKLY

    PEK 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

Bulls have recaptured the tape for now encouraged by earnings (some they choose to follow at least), data from China, ECB QE baby steps and Existing Home Sales all of which is spun positively.

Now U.S. QE will end next week. Without the safety wheels markets will find it a challenge to move forward. You wouldn’t know it from the action over the past 4 trading days. But as Bank of America/Merrill Lynch analysts state the Fed will fly to stock market’s rescue should we drop another 10% below last week’s lows. For BAC/ML that’s a pretty easy call and one wonders why they get paid for that lay-up prediction.

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
Gold1,249.10-1.30-0.10 %20:00
WTI Crude Futr82.730.240.29 % 19:28
Index Quotes Change Change % Local
CRB273.001.870.69 % 17:28
US Dollar85.470.020.02 % 17:00
Index Quotes Change Change % Local
VIX16.08-2.49-13.41 %16:14
MSCI Value Daily MTD YTD
Brazil2083.580-3.51 %-4.00 %-6.07 %
Russia585.8861.05 %-4.13 %-25.54 %
India492.8340.49 %-1.56 %21.00 %
China61.584-0.22 %-0.13 %-2.41 %