For Yellen -- Third Time is the Charm
0
April 16, 2014

4-16-2014 4-27-25 PM Yellen

Markets are repeating the February/March decline and bounce.

Aside from Russian conditions there’s not much difference in the news and reactions to it. China data continues to be weak and most economic data elsewhere isn’t inspiring. Even while Chinese authorities indicate there will be no stimulus, bulls continue to believe they will do so. China data today reported housing construction down 25% amid tighter credit and GDP estimates reported at 7.4% which is weak by their standards.

But Yellen tried again to regain credibility and seems to have managed a more credible presentation making bulls happy.

Housing Starts rose but missed at 945K vs 965K expected & prior 920K. Industrial Production beat expectations but declined at the same time to 0.7% vs 0.4% expected & prior 1.2%. The Fed’s Beige Book didn’t show much new although weather was repeatedly cited as a factor for any weakness. Overall growth was modest and consumer spending accelerated post weather restraints.

As indicated previously markets rose on dip buying just as they did in late winter. Russian activities in Ukraine don’t seem to bother Europeans or U.S. markets much. Bad earnings from Bank of America (BAC) were shrugged-off by bulls while good news from Yahoo (YHOO) was headlined and cheered. Earnings beats based on much reduced analysts’ forecast are ubiquitous once again as that WS game continues to sell soap.

After the close of trading, earnings reports will feature Dow heavyweights International Business Machines (IBM), American Express (AXP) and tech stalwart Google (GOOG).

To sum up, we’re back to the “bad news is good and good news is better” can’t lose narrative.

Leading market sectors higher included: Materials (XLB), Industrials (XLI), Transports (IYT), Tech (XLK), Biotech (IBB), Internet (FDN), Broker/Dealers (IEI), Energy (XLE), Consumer Discretionary (XLY), Emerging Markets (EEM), China (FXI), Australia (EWA), Brazil (EWZ), Germany (EWG), Europe (VGK), Solar (TAN), Shipping (SEA), Thailand (THD), Japan (EWJ), Russia (RSX) and Italy (EWI).

Leading market sectors lower included: Semiconductors (SMH), Gold Miners (GDX), Natural Gas (UNG), Silver Miners (SIL), Vietnam (VNM), Brazil Real (BZF), Agriculture (DBA), Grains (JJG) and Bonds (IEF).

Chart of the Day:

SPDR S&P 500 ETF (SPY) is displayed on this daily chart. The few bears still alive may take a desperate shot suggesting a potential bearish Head & Shoulders top formation is almost present. I’m not a great believer in these (er, until I am) as being effective. But, given the din of bullish commentary available I’d just point this out just for entertainment purposes.

 4-16-2014 6-32-19 PM SPY

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

Volume has become light once again with buying and breadth per the WSJ was positive.

 4-16-2014 6-34-34 PM dIARY

Markets are repeating the February/March decline and bounce. Aside from Russian conditions there’s not much difference in the news and reactions to it. China data continues to be weak and most economic data elsewhere isn’t inspiring. Even while Chinese authorities indicate there will be no stimulus, bulls continue to believe they will do so. China data today reported housing construction down 25% amid tighter credit and GDP estimates reported at 7.4% which is weak by their standards.

 

But Yellen tried again to regain credibility and seems to have managed a more credible presentation making bulls happy.

 

Housing Starts rose but missed at 945K vs 965K expected & prior 920K. Industrial Production beat expectations but declined at the same time to 0.7% vs 0.4% expected & prior 1.2%. The Fed’s Beige Book didn’t show much new although weather was repeatedly cited as a factor for any weakness. Overall growth was modest and consumer spending accelerated post weather restraints.

 

As indicated previously markets rose on dip buying just as they did in late winter. Russian activities in Ukraine don’t seem to bother Europeans or U.S. markets much. Bad earnings from Bank of America (BAC) were shrugged-off by bulls while good news from Yahoo (YHOO) was headlined and cheered. Earnings beats based on much reduced analysts’ forecast are ubiquitous once again as that WS game continues to sell soap.

 

After the close of trading, earnings reports will feature Dow heavyweights International Business Machines (IBM), American Express (AXP) and tech stalwart Google (GOOG).

 

To sum up, we’re back to the “bad news is good and good news is better” can’t lose narrative.

 

Leading market sectors higher included: Materials (XLB), Industrials (XLI), Transports (IYT), Tech (XLK), Biotech (IBB), Internet (FDN), Broker/Dealers (IEI), Energy (XLE), Consumer Discretionary (XLY), Emerging Markets (EEM), China (FXI), Australia (EWA), Brazil (EWZ), Germany (EWG), Europe (VGK), Solar (TAN), Shipping (SEA), Thailand (THD), Japan (EWJ), Russia (RSX) and Italy (EWI).

 

Leading market sectors lower included: Semiconductors (SMH), Gold Miners (GDX), Natural Gas (UNG), Silver Miners (SIL), Vietnam (VNM), Brazil Real (BZF), Agriculture (DBA), Grains (JJG) and Bonds (IEF).

 

Chart of the Day:

 

SPDR S&P 500 ETF (SPY) is displayed on this daily chart. The few bears still alive may take a desperate shot suggesting a potential bearish Head & Shoulders top formation is almost present. I’m not a great believer in these (er, until I am) as being effective. But, given the din of bullish commentary available I’d just point this out just for entertainment purposes.

Charts of the Day
  • SPY 5 MINUTE

    SPY 5 MINUTE

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • FDN WEEKLY

    FDN WEEKLY

  • SMH WEEKLY

    SMH WEEKLY

  • QQEW WEEKLY

    QQEW WEEKLY

  • XLB WEEKLY

    XLB WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • VBR WEEKLY

    VBR WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • IBB WEEKLY

    IBB WEEKLY

  • ICF WEEKLY

    ICF WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • IYT WEEKLY

    IYT WEEKLY

  • TLT

    TLT

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • JJC WEEKLY

    JJC WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • UNG WEEKLY

    UNG WEEKLY

  • UGA WEEKLY

    UGA WEEKLY

  • DBC WEEKLY

    DBC WEEKLY

  • DBA WEEKLY

    DBA WEEKLY

  • VEA WEEKLY

    VEA WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • EWG WEEKLY

    EWG WEEKLY

  • EPOL WEEKLY

    EPOL WEEKLY

  • EWA WEEKLY

    EWA WEEKLY

  • EPHE WEEKLY

    EPHE WEEKLY

  • VNM WEEKLY

    VNM WEEKLY

  • EWY WEEKLY

    EWY WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • RSX WEEKLY

    RSX 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 big three (IBM, Google & American Express) all missed earnings estimates in one way or another.

This “may” slow the rally down somewhat but don’t count on it since bulls will find something else that beats to mitigate disappointments elsewhere.

Thursday reveals Jobless Claims and Philly Fed Survey once again.

Earnings features Auto Nation (AN), where if you have a pulse you can buy a car, Baker Hughes (BHI), BlackRock (BLK), Blackstone Group (BX), Chipotle Mexican Grill (CMG), DuPont (DD), Dover (DOV), Fith Third Bank (FITB), General Electric (GE), Morgan Stanley (MS), Schlumberger (SLB), Pepsi (PEP), SAP AG (SAP) and Union Pacific (UNP).

Let’s see what happens.

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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
Gold1,304.100.900.07 % 07:55
WTI Crude Futr %
Index Quotes Change Change % Local
CRB309.720.480.16 % 17:28
US Dollar79.90-0.01-0.01 %16:59
Index Quotes Change Change % Local
VIX14.18-1.43-9.16 %04/16
MSCI Value Daily MTD YTD
Brazil2305.0231.10 %1.91 % 3.92 %
Russia631.2791.08 %-6.23 %-19.78 %
India434.143-1.33 %-1.16 %6.59 %
China59.6050.03 %0.34 % -5.54 %