Bulls Regain Control
0
April 17, 2014

4-17-2014 3-38-15 PM Hiccup

 

 

Jobless Claims rose slightly from 302K to 304K. The Philly Fed Survey was higher 16.6 vs 9 previously. Within the numbers the forward guidance was quite negative suggesting the reading reflects a weather catch-up as shown below by Zero Hedge:

 

4-17-2014 7-59-46 PM Philly Fed

Meanwhile hope springs eternal that China will revive stimulus even as bulls won’t take no for an answer. In fact Thursday Li stated there would only be a “prudent monetary policy” with no stimulus. This theme of “no stimulus” was repeated by state organ Xinhua News. Bulls still expect some loosening of tight credit as China housing construction fell 25% in the prior quarter.

Last night, earnings from Google (GOOG), International Business Machines (IBM) and American Express (AXP) all missing target earnings and/or revenues in one form or another. Much of this was dismissed by better perceived earnings from Morgan Stanley (MS) and Goldman Sachs (GS).

The former continues to use accounting trickeration as Debt Valuation Adjustments (DVA) helped earnings growth.

So what the hell are DVA’s?  The accounting trick is a decline in the value of debt issued by Morgan Stanley should be deemed an addition to earnings. (Yeah, I know it’s a stretch, but the algos don’t have time to evaluate this stuff.)

Other earnings news Thursday featured a good report from Chipotle (CMG) and Pepsi (PEP) while mixed to poor results from General Electric (GE), DuPont (DD) and United Healthcare (UNH) were ignored in favor of publicized winners.

Fed Chair Janet Yellen, while looking at her crystal ball noted, the economy should achieve full employment by the end of 2016 and stellar GDP growth. To which one might cite former economist Edgar Fieldler: “If you must forecast, forecast often”.

Leading market sectors higher included: Energy (XLE), Broker/Dealers (IAI), Semiconductor (SMH), Industrials (XLI), Transports (IYT), Emerging Markets (EEM), Turkey (TUR), EAFE (VEA), Europe (VGK), Russia (RSX), Brazil (EWZ), Gulf states (MES), India (EPI), China (FXI), Natural Gas (UNG), Oil (USO) and Agriculture (DBA).

Leading market sectors lower included: Gold (GLD), Gold Miners (GDX), Silver Miners (SIL), Utilities (XLU), REITs (IYR), Homebuilders (ITB) and Bonds (TLT).

Trading overall on options expiration and the Good Friday Holiday was tame with bulls barely in control of conditions. But in the end it was a good week for them.

Chart of the Day: Market Vectors Gulf States ETF (MES) follows markets primarily weighted by financial sectors and not energy which are mostly state owned. Nevertheless the booming energy business throws off plenty of economic benefits to these economies. Note two high (HI) indicators with only the latter being effective as markets at that time were much overbought. From that point we’ve just moved sideways.

4-17-2014 8-00-17 PMMES

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

Volume was light and breadth per the WSJ was mixed.

4-17-2014 8-01-39 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

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • IAI WEEKLY

    IAI WEEKLY

  • SMH WEEKLY

    SMH WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • IYT WEEKLY

    IYT WEEKLY

  • XLU WEEKLY

    XLU WEEKLY

  • IYR WEEKLY

    IYR WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SIL WEEKLY

    SIL WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • UNG WEEKLY

    UNG WEEKLY

  • DBA WEEKLY

    DBA WEEKLY

  • GCC WEEKLY

    GCC WEEKLY

  • VEA WEEKLY

    VEA WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • EEM WEEKLY

    EEM WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • TUR WEEKLY

    TUR WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • RSX WEEKLY

    RSX WEEKLY

  • FXI WEEKLY

    FXI WEEKLY

  • NYMO

    NYMO

    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

    NYSI

    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

    VIX

    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

The week’s rally was mostly about Yellen’s commitments to keep interest rates low and abandoning silly unemployment rate thresholds. She even went so far as to predict (risky business) full employment by year-end 2016. That must mean the long term unemployed will just die off or disappear somehow. This won’t happen naturally and bold predictions like this are a mistake.

For most of the world it’s a long weekend. A lot of good or bad things can happen naturally and it’s certainly not my specialty to guess what those might be.

We know more earnings news will come out and they’ll be spun as only the financial media can do. Then economic data will feature Leading Indicators (Monday), Existing Home Sales and FHFA House Price Index (Tuesday), New Home Sales and PMI Mfg Index Flash (Wednesday), Durable Goods Orders and Jobless Claims (Thursday) and PMI Services Index Flash and Consumer Sentiment (Friday)

Enjoy your Easter fun and games.

 

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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
Gold1,295.600.000.00 % 17:15
WTI Crude Futr104.300.540.52 % 04/17
Index Quotes Change Change % Local
CRB311.461.740.56 % 17:28
US Dollar79.93-0.01-0.01 %16:59
Index Quotes Change Change % Local
VIX13.36-0.82-5.78 %04/17
MSCI Value Daily MTD YTD
Brazil2335.1921.31 %3.24 % 5.28 %
Russia640.5711.47 %-4.85 %-18.59 %
India440.1481.38 %0.20 % 8.06 %
China59.8810.46 %0.81 % -5.11 %