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.
The top 20 market movers by percentage change in volume whether rising or falling is available daily.
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.
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||82.73||0.24||0.29 %||19:28|
|US Dollar||85.47||0.02||0.02 %||17:00|
|Brazil||2083.580||-3.51 %||-4.00 %||-6.07 %|
|Russia||585.886||1.05 %||-4.13 %||-25.54 %|
|India||492.834||0.49 %||-1.56 %||21.00 %|
|China||61.584||-0.22 %||-0.13 %||-2.41 %|