Bull And Bear Traps Mark The End Of Quarter
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March 31, 2015

3-31-2015 6-10-24 PM traps

When stock prices are high and volatility builds it may well be a sign of a market top.

I outlined for subscribers last weekend stock patterns from the top of 2007 to the current period that seemed “similar”.

The major difference of course was the current heavy liquidity overhang from Fed QE and ZIRP monetary policies.

Chart A & B are monthly charts of SPY addressing pattern similarities. The key in 2007 was the break of the 12 period monthly moving average which isn’t seen yet currently in 2005.

Chart A

3-31-2015 6-13-07 PM spy

Chart B

3-31-2015 6-13-49 PM spy2

So what might tip markets over this time? Much inflated stock prices probably given lower earnings forecasts.

Monday markets were rattled perhaps by Fed Governor Lacker stating strong case for interest rate hike in June.

But elsewhere economic data was mixed depending how you viewed what’s important. Case-Shiller HPI seasonally adjusted: 0.9% vs 0.7% expected & prior 0.9%; not seasonally adjusted 0.0% vs 0.1% expected & prior 0.1%. (Seasonal Adjustments can be faulty.) Chicago PMI remained on the weak side at 46.3 vs 50.2 expected & prior 45.8. Consumer Confidence was strong likely occasioned by lower energy prices at 101.3 vs 95.8 expected & prior 98.8.

For the quarter ending March 31st SPY was up only 0.4% YTD.

Meanwhile at the ETF Digest, Aggressive Growth was up 16.23% YTD and Growth & Income was up 1.11%.

Leading market sectors higher included: Too few to mention.

Leading market sectors lower included: Most everything else.

3-31-2015 6-14-17 PM spy

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

Volume rose markedly from the Monday light volume rally. Breadth per the WSJ was negative.

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3-31-2015 6-15-44 PM Diary

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPY DAILY

    SPY DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

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  • RUT WEEKLY

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  • XLB WEEKLY

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  • EWZ MONTHLY

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  • RSX MONTHLY

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  • EPI WEEKLY

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  • FXI WEEKLY

    FXI 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.


Comparing prior periods is hazardous and often not repetitive as conditions vary. Nevertheless they’re worth observing as in one important way there may be similar conditions now as in 2007 when prices became inflated.

Program trading by computer algos has never been more ubiquitous.

Today markets stopped trading for about 7 minutes as the market was halted.

The reason was probably some “fat finger” trades in error. But this is the kind of stuff that’s “out there” lurking over markets.

Much more economic data is available Wednesday featuring manufacturing and employment data.

Let’s see what happens.

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...

Headshot David Fry xsmall

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

ETF Digest™
 

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
Gold1,206.0022.301.89 % 12:34
WTI Crude Futr49.491.893.97 % 12:02
Index Quotes Change Change % Local
CRB215.453.591.69 % 12:08
US Dollar98.40-0.30-0.30 %12:23
Index Quotes Change Change % Local
VIX16.010.724.71 % 12:07
MSCI Value Daily MTD YTD
Brazil1548.2611.75 %-11.49 %-15.50 %
Russia480.2920.39 %-2.67 %18.61 %
India522.0590.38 %-4.28 %5.17 %
China71.3980.59 %2.41 % 8.12 %