TBTP Lower Boom On Stocks
0
April 17, 2015

China authorities lowered the boom on runaway panic buying by investors increasing margin requirements there to stop it.

And it did to a certain extent. Believe it or not, at the same time Greece is struggling to find a way to avoid a default and not pay current payment requirements at the same time. (This getting tiresome for sure.)

Next, there is a growing understanding the large growth in corporate debt used to fund M&A and stock buybacks is becoming dangerous. Earnings overall were perceived as subpar.

Lastly there fears linger over just what the Fed and other central banks are doing with monetary policies.

The sideshows of the day is the ECB may consider a Greek parallel currency--another trial balloon? US economic data reflecting high Consumer Sentiment (95.9 vs 95 expected & prior 93), CPI across the board at 0.2% and Leading Indicators rather weak (0.2% vs 0.3% expected & prior 0.2%).

Leading market sectors higher included: VIX (VXX), Gold (GLD) and Bonds (TLT).

Leading market sectors lower included: Everything else just about.                                                                

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

Volume rose sharply on the day and breadth per the WSJ was decidedly negative. Money Flow continued weak for the day and week.

4-17-2015 6-21-18 PM dIARY

 

Charts of the Day
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  • NYMO DAILY

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    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.

 

There is some greed and fear in markets now.

We see that especially in China and how investors rationalize current conditions as supported by central banks.

The latter allows them to ignore macro data believing the Fed can resolve everything.

The tape is what matters most naturally and that is arguably bullish and that’s the way we’re positioned until we’re not.

Bernanke with a high speed trading firm so as not to appear with conflicts of interest?

As someone who is experienced with Chinese markets over the past 25 years one thing was always clear, China retail investors are immature. The buying there over the past two weeks even shocks many ETF providers. It was logical a year’s worth of gains in two weeks would be taken down.

Greece needs to fish or cut bait now as most find the entire two year plus episode tiresome.

So, some pegged the market decline Friday to sup par earnings results? You wouldn’t have gotten that message from bulls the entire week as they raved about “great” earnings.

Ben Carlson of Wealth of Common Sense noted the following current market themes and investor beliefs:

"One of the common misconceptions I’m starting to hear from investors is that because we’re in a low interest rate environment, stocks either can’t or won’t fall very far from these levels. This is the TINA (there is no alternative) argument that says because over the longer-term bonds returns will be much lower from today’s yield levels, stocks should be supported because people have to put their money to work somewhere to earn a respectable return. This theory does make a lot of sense when coming up with an explanation as to why the market has always seemed to have a bid under it anytime stocks started to fall over the past few years. But it would be a mistake to assume that this can go on forever and that risk won’t rear its ugly head eventually with another bear market."

That’s just one of a few common misconceptions current investor avow. Over the weekend, I’ll document others for premium members.

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.  ETF Digest was named one of the most informative ETF website in the 10th Annual Global ETF Awards.

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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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
Gold1,204.305.500.46 % 04/17
WTI Crude Futr56.14-0.57-1.01 %17:14
Index Quotes Change Change % Local
CRB223.94-1.78-0.79 %17:28
US Dollar97.62-0.26-0.27 %16:59
Index Quotes Change Change % Local
VIX13.891.2910.24 % 16:14
MSCI Value Daily MTD YTD
Brazil1735.4480.67 %12.09 % -5.29 %
Russia581.1251.68 %20.99 % 43.52 %
India540.237-0.19 %3.48 % 8.83 %
China83.2271.31 %16.57 % 26.03 %