On the 5th Day, Markets Rally A Little
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March 27, 2015

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Stocks were able to rally modestly Friday helped theoretically on hopes Janet Yellen will say something bullish in a speech she’s giving 15 minutes before the close of trading.

(The official Fed release Yellen stated to “expect gradual interest rate increases this year”.) Nothing bullish there! And I’m hardly alone in thinking the Fed is trapped at zero.

The leading news was the poor GDP report showing the economy continues along weekly. GDP data showed the economy at a lowly 2.2% vs 2.4% expected & prior 2.2%.

Summary and Commentary

The GDP full report is best summarized by Consumer Metrics Institute.

“Any revisions seen in this report (like those in its predecessor) are mainly noise. The lack of material new information offers an opportunity to reflect on several the larger issues evident in recent GDP reporting:

-- Inventory fluctuations (whether real or imaginary) continue to play havoc with the headline number. An accurately measured line item that captures real physical inventory levels should have nearly zero sum changes over year-long time spans. It would be very useful to definitively know if any increased production is being fully consumed or merely inventoried. But the BEA's current inventory methodologies and data are counterproductive. They often include phantom inventory changes that are in fact the artifacts of rogue "deflators" impacting inventory valuations -- and not actual changes in physical inventory levels. And any useful physical inventory data is so late arriving that it gets finalized only in the annual July revisions -- long after anyone (other than academicians at the BEA) still cares.

-- The discrepancies between the BEA's and the BLS's inflation reporting is staggering. It feels like a sporting event where each team keeps its own score -- reflecting their own political agendas. Can't we just have one set of "best practice" Federal inflation data that has transparency, consistency and accuracy as the primary agenda items?

-- Speaking of deflators, clearly the BEA's are troubling. But using more reasonable deflators from the BLS or other third parties generates nonsensical growth rates when applied to the BEA's nominal data. This in turn suggests that the BEA's initial nominal data may be more overstated (or optimistically guesstimated) than reasonable deflators can handle -- which perhaps the BEA is tacitly admitting by using unreasonable deflators.

-- Can't the BEA include Federal fiscal year-end budgetary shenanigans in its otherwise impenetrably opaque "seasonal adjustment" protocols? How can third calendar quarter (fourth fiscal quarter) Federal spending always be an annual upside surprise?

-- Should economic data in the 21st century still be reported using the methodologies and calendars developed by Wesley Clair Mitchell (at the behest of Franklin Roosevelt) in 1934? Can't we do better than quarterly data published monthly? With the first "estimate" more accurately described as "a wild ass guess, fudged to align with media expectations"? And with the second and third estimates actually just place holders that have been gently nudged towards the numbers that the BEA expects will ultimately show up in the next annual revision?

It all brings to mind Ralph Waldo Emerson's foolish consistency -- a consistency that conveniently maintains a methodology based deniability.

That said, stay tuned for the next report (covering 1Q-2015), which could be far more interesting.”

Another view of the consumer spending input to GDP shows as ZH reports, it was for Obamacare.

3-27-2015 6-08-42 PM GDP

Leading market sectors higher included: Tech (QQQ), Small Caps (IWM), Healthcare (XLV), Biotech (IBB), Consumer Staples (XLP), Consumer Discretionary (XLY), Retail (XRT), Homebuilders (ITB), Utilities (XLU), China (FXI), Japan (EWJ), European Monetary Union (EMU), Germany (EWG), South Africa (EZA), Bonds (TLT) and more.

Leading market sectors lower included: Energy (XLE), Oil Exploration & Production (XOP), Financials (XLF), Banks (KBE), Regional Banks (KRE), Brazil (EWZ), Russia (RSX), Greece (GREK), Turkey (TUR), Gold (GLD), Gold Miners (GDX), Crude Oil (USO), Natural Gas (UNG), Commodity Tracking Index (DBC) and more. 

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

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Volume turned light on Friday as one must think “dead cat bounce”. That said, breadth was modestly and/or mixed to positive while money flow both day and week remain negative.

3-27-2015 6-10-46 PM Diary

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPY DAILY

    SPY DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

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  • NDX WEEKLY

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  • XLB WEEKLY

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  • XLE WEEKLY

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  • XLF WEEKLY

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  • XLI WEEKLY

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  • XLP WEEKLY

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  • XLY WEEKLY

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  • XRT WEEKLY

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  • XLV WEEKLY

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  • IBB WEEKLY

    IBB WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • IYR WEEKLY

    IYR WEEKLY

  • IYT WEEKLY

    IYT  WEEKLY

  • XLU WEEKLY

    XLU WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • 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

    USO WEEKLY

  • DBA WEEKLY

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  • EFA WEEKLY

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  • EEM WEEKLY

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  • EWY WEEKLY

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  • EWA WEEKLY

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  • EWG WEEKLY

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  • EZA WEEKLY

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  • EWZ MONTHLY

    EWZ MONTHLY

  • RSX MONTHLY

    RSX MONTHLY

  • EPI WEEKLY

    EPI WEEKLY

  • GXC WEEKLY

    GXC 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.

Yellen’s late remarks were hardly bullish and perhaps we just have a “dead cat bounce”.

Next week will close the month giving bulls an opportunity to save the quarter. Thus far most indexes and sectors are producing negative returns on the year.

Let’s see what happens.

 

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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

 

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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
Gold1,199.40-5.70-0.47 %03/27
WTI Crude Futr48.43-3.00-5.83 %17:15
Index Quotes Change Change % Local
CRB215.16-4.33-1.97 %17:28
US Dollar97.620.070.07 % 16:59
Index Quotes Change Change % Local
VIX15.07-0.73-4.62 %16:14
MSCI Value Daily MTD YTD
Brazil1534.580-3.12 %-12.27 %-16.25 %
Russia473.207-1.63 %-4.11 %16.86 %
India512.508-2.88 %-6.03 %3.25 %
China69.062-0.39 %-0.94 %4.58 %