We closed the third quarter with barely enough bullish momentum to allow Da Boyz to collect some bonus money and walk away. They’re too busy shopping for Porsche’s and other fineries to allow them some time off. Naturally they expect to return later in the fourth quarter to score more gains for another round of bonuses. That’s the way we’ve rolled since this 6 year rally began.
Stocks were hit higher by several factors that have been on the radar the past two weeks but overwhelmed by bonus junkies. The litany includes geopolitical concerns (Ukraine, Hong Kong, our ISIS pals and etc), the quality of U.S. earnings reports scheduled for next week, EU’s economy, potential currency wars among the G-8 and declining economic data globally.
Economic data in the U.S. featured: ADP Employment Report 213K vs 200K expected & prior 202K (not the most reliable data since they changed their methodology); PMI Mfg Index dropped slightly 57.5 vs 58 expected & prior 57.9; ISM Mfg Index fell sharply to 56.6 vs 58 expected & prior 59 and Construction Spending fell again -0.8% vs 0.5% expected & prior 1.2%.
The ECB is set to meet Thursday and Mario Draghi is on the spot given all the much delayed promises for QE and other stimulus (“all possible measures are on the table” and etc). During the year since making these promises he’s not done anything beyond talking. It’s rumored that he wants to buy junk Greek debt (with others to follow theoretically) which hasn’t pleased the Germans any. So we’ll see what happens.
Meanwhile Hong Kong is starting to celebrate a two day holiday which theoretically will bring out even more Occupy Hong Kong demonstrators. Clearly China is not pleased.
Stocks were hit hard once again Wednesday as the new quarter began. On Monday we hedged our Growth & Income Portfolio and remained flat Aggressive Growth and almost all ETFs on the Select Menu of over 80 ETFs.
Leading market sectors higher included: Gold (GLD), Silver (SLV), Junior Gold Miners (GDXJ), Utilities (XLU), Bonds (TLT) and not much else.
Leading market sectors lower included: Basically everything from everywhere. Things were bad enough that even VIX futures and options stopped trading. (That saved me some time thank you.)
The top 20 market movers by percentage change in volume whether rising or falling is available daily.
Volume was very heavy which is typical of major sell days. Breadth per the WSJ was negative as you might imagine.
So markets are short-term oversold again. We saw this condition the prior week then we had the Friday comeback rally which lifted indexes off their lows. Now we may be in a “wax on, wax off” repeat. That said, markets are in some potentially serious trouble. Don’t worry just yet since many Fed speakers will be out on the hustings selling their BS.
Thursday brings once again Jobless Claims and Factory Orders. And, who can forget another moment in the sun for Mario Draghi?
Let’s see what happens.
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".
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
|WTI Crude Futr||90.80||0.07||0.08 %||22:06|
|US Dollar||85.97||-0.03||-0.04 %||17:00|
|Brazil||2112.951||-2.64 %||-2.64 %||-4.74 %|
|Russia||604.015||-1.16 %||-1.16 %||-23.24 %|
|India||501.692||0.21 %||0.21 %||23.17 %|
|China||61.665||0.00 %||0.00 %||-2.28 %|