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GDP DATA CONFIRMS SLOW GROWTH
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January 27, 2012
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GDP data was released Friday revealing headline economic growth of 2.8% versus consensus of 3.1%. Real economic growth after inflation was only 1.7% for 2011. Negatively affecting the data were lower state and local government spending, private inventory investment and, believe it or not, federal government spending. While the all-important, and much watched by the Fed, PCE (Personal Consumption Expenditures) was higher it was a disappointment overall. This may reflect what the Fed saw in the data (weak growth) which then caused them to keep interest rates low for a long period. They must worry this slow growth condition is going to be with us for a long time. This is hardly encouraging.

 

The month of January has only a couple of trading days left. Even with Friday’s poor performance the month is still scoring outsized gains for most stock sectors. Consumer Sentiment data has stock prices as a high component, so it’s not surprising the measure was 75 versus 74 expected.

 

From our credible and thoughtful friend, Richard Davis at Consumer Metrics, comments:

 

“There has been no improvement in real per capita disposable income that could warrant any increase in consumer spending, and the fourth quarter splurge on goods is likely coming from a draw-down in savings, a partially offsetting decrease in spending on services and extra "pocket money" from lower at-pump gasoline prices. At a macro level those funding sources have been augmented by an enormous expansion of student loans and (for a non-trivial portion of all households) unprecedented rent-free living as a consequence of vastly extended foreclosure proceedings. With the exception of the rent-free and student loan components (for which there simply are no horizons or painless end-games), all of the probable sources for the increased consumer spending will probably revert to historical norms during 2012.”

 

Ford’s (F) earnings report overall missed estimates; Chevron’s (CVX) also missed along with Procter & Gamble (PG). D.R. Horton (DHI) beat overall estimates, and so things went. As homebuilder shares like DHI continue to rise—it’s notable that lumber was one of the big losers so far for January declining 7.5%.

 

The dollar was weaker once again vs the euro as perhaps the short squeeze there continues. As the euro gained so too did gold and bonds. Those buying bonds must be hedging with gold. That seems silly but may be true. Most other commodity sectors were relatively unchanged.

 

CNBC’s Rick Santelli lays-out the unpleasant and harsh reality of U.S. debt. And speaking of debt, rating agency Fitch cut its ratings mid-day for Italy, Ireland, Spain, Slovenia, Belgium and Cyprus by 1-2 notches each. This matches similar moves by S&P as most continue to “lead from behind”. Just before the close of trading, and not to be outdone, S&P lowered the rating for Sicily from A to BBB+. They won’t be visiting sunny Sicily anytime soon at least not without coming in “heavy” as they say. And after all this the euro’s rally continued since all this is so bullish.

 

Facebook may file for IPO by Wednesday. I guess Mark Zuckerberg et al must be getting a little nervous about the markets and wish to get what they can now.

 

Stocks rebounded some from intraday lows to close mixed on Friday with most indexes lower except for tech. Breadth per the WSJ was still positive overall building on overbought conditions.

 

Follow our pithy comments on twitter and join the banter with me on  facebook.

 

Today from ETF Digest:

Charts of the Day
  • SPY 5 MINUTE

    SPY 5 MINUTE

    SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • SPY DAILY

    SPY DAILY

    SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • SPY WEEKLY

    SPY WEEKLY

    SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • IWM WEEKLY

    IWM WEEKLY

    IWM - The iShares Russell 2000 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the small capitalization sector of the U.S. equity market as represented by the Russell 2000 Index. The index represents the approximately 2,000 smallest companies in the Russell 3000 Index.
    See more details

  • QQQ WEEKLY

    QQQ WEEKLY

    QQQ - PowerShares Capital Management LLC is passionate about our goal of delivering the highest quality investment management available through one of the more benefit-rich investment vehicles ever created, the exchange-traded fund.PowerShares QQQ™, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consists of all of stocks in the Index.
    See more details

  • F WEEKLY

    F WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

    XLY - The Consumer Discretionary Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Consumer Discretionary Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • CVX WEEKLY

    CVX WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

    XLE - The Energy Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Energy Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • DHI WEEKLY

    DHI WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

    ITB - The iShares Dow Jones U.S. Home Construction Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Select Home Construction Index.
    See more details

  • PG WEEKLY

    PG WEEKLY

  • XLP WEEKLY

    XLP WEEKLY

    XLP - The Consumer Staples Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Consumer Staples Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • XLF WEEKLY

    XLF WEEKLY

    XLF - The Financial Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Financial Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • XLB WEEKLY

    XLB WEEKLY

    XLB - The Materials Select Sector SPDR® Fund, before expenses, seeks to closely match the returns and characteristics of the Materials Select Sector Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • XBI WEEKLY

    XBI WEEKLY

    XBI - The SPDR® S&P® Biotech ETF, before expenses, seeks to closely match the returns and characteristics of the S&P Biotechnology Select IndustryTM Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
    See more details

  • IYR WEEKLY

    IYR WEEKLY

    IYR - The iShares Dow Jones U.S. Real Estate Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, to the performance of the real estate sector of the U.S. equity market, as represented by the Dow Jones U.S. Real Estate Index.
    See more details

  • IEF WEEKLY

    IEF WEEKLY

    IEF - The iShares Barclays 7-10 Year Treasury Bond Fund seeks to approximate the total rate of return of the intermediate-term sector of the United States Treasury market as defined by the Barclays Capital U.S. 7-10 Year Treasury Bond Index.
    See more details

  • MBB WEEKLY

    MBB WEEKLY

    If You Can’t Beat them, Join Them: MBB

  • TLT WEEKLY

    TLT WEEKLY

    TLT - The iShares Barclays 20+ Year Treasury Bond Fund seeks to approximate the total rate of return of the long-term sector of the United States Treasury market as defined by the Barclays Capital U.S. 20+ Year Treasury Bond Index.
    See more details

  • UUP WEEKLY

    UUP WEEKLY

    UUP - The PowerShares DB US Dollar Bullish Fund (Symbol: UUP) is based on the Deutsche Bank Long US Dollar Index (USDX®) Futures Index™ (DB Long USD Futures Index). The Index, which is managed by DB Commodity Services LLC, is a rules-based index composed solely of long USDX® futures contracts. See more details

  • FXE WEEKLY

    FXE WEEKLY

    FXE - CurrencyShares Euro Trust is designed to track the price of the euro net of Trust expenses, which are expected to be paid from interest earned on the deposited euros.
    See more details

  • GLD WEEKLY

    GLD WEEKLY

    GLD - The objective of the SPDR® Gold Trust† is for the Shares to reflect the performance of the price of gold bullion, less the Trust's expenses.
    See more details

  • GDX WEEKLY

    GDX WEEKLY

    GDX - The Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the NYSE Arca Gold Miners Index.
    See more details

  • SLV WEEKLY

    SLV WEEKLY

    SLV - The objective of the iShares Silver Trust is for the value of the shares of the iShares Silver Trust to reflect, at any given time, the price of silver owned by the iShares Silver Trust at that time, less the iShares Silver Trust's expenses and liabilities.
    See more details

  • DBB WEEKLY

    DBB WEEKLY

    DBB - The PowerShares DB Base Metals Fund (Fund) is based on the Deutsche Bank Liquid Commodity Index – Optimum Yield Industrial Metals Excess Return™ (Index) and managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most liquid and widely used base metals – aluminum, zinc and copper (grade A).
    See more details

  • JJC WEEKLY

    JJC WEEKLY

    JJC - The Dow Jones-UBS Copper Subindex Total ReturnService Mark is a sub-index of the Dow Jones-UBS Commodity Index Total ReturnService Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills.
    See more details

  • DJP WEEKLY

    DJP WEEKLY

    DJP - The iPath® Dow Jones-UBS Commodity Index Total ReturnService Mark ETN is linked to the Dow Jones-UBS Commodity Index Total ReturnService Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The commodities represented in the Dow Jones-UBS Commodity Index Total ReturnService Mark are rebalanced annually; however, the weightings fluctuate between

  • USO WEEKLY

    USO WEEKLY

    USO - The United States Oil Fund, LP ("USO") is a domestic exchange traded security designed to track the movements of light, sweet crude oil ("West Texas Intermediate").
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  • UGA WEEKLY

    UGA WEEKLY

    UGA - The United States Gasoline Fund LP (UGA) is an exchange traded security that is designed to track in percentage terms the movements of gasoline prices.
    See more details

  • UNG WEEKLY

    UNG WEEKLY

    UNG - The United States Natural Gas Fund LP (UNG) is an exchange traded security that is designed to track in percentage terms the movements of natural gas prices.
    See more details

  • TAN WEEKLY

    TAN WEEKLY

    TAN - The Guggenheim/MAC Global Solar Energy Index ETF seeks investment results that correspond generally to the performance, before the Fund’s fees and expenses, of an equity index called the MAC Global Solar Energy Index. The Fund will normally invest at least 90% of its total assets in common stock, American depositary receipts and global depositary receipts that comprise the Index. Guggenheim Advisors, LLC seeks a correlation over time of 0.95 or better between the Fund’s performance and the performance of the Index.
    See more details

  • JJG WEEKLY

    JJG WEEKLY

    JJG - The Dow Jones-UBS Grains Subindex Total ReturnService Mark is a sub-index of the Dow Jones-UBS Commodity Index Total ReturnService Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the Index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The Index is currently composed of three futures contracts on grains traded on U.S. exchanges.
    See more details

  • EFA WEEKLY

    EFA WEEKLY

    EFA - The iShares MSCI EAFE Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the European, Australasian and Far Eastern markets, as measured by the MSCI EAFE Index.
    See more details

  • EEM WEEKLY

    EEM WEEKLY

    EEM - The iShares MSCI Emerging Markets Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index.
    See more details

  • EWJ WEEKLY

    EWJ WEEKLY

    EWJ - The iShares MSCI Japan Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Japanese market, as measured by the MSCI Japan Index.
    See more details

  • EWU WEEKLY

    EWU WEEKLY

    EWU - The iShares MSCI United Kingdom Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the British market, as measured by the MSCI United Kingdom Index.
    See more details

  • EWG WEEKLY

    EWG WEEKLY

    EWG - The iShares MSCI Germany Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the German market, as measured by the MSCI Germany Index.
    See more details

  • GREK WEEKLY

    GREK WEEKLY

    GREK - The Global X FTSE Greece 20 ETF seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE/ATHEX 20 Capped Index.
    See more details

  • EWC WEEKLY

    EWC WEEKLY

    EWC - The iShares MSCI Canada Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Canadian market, as measured by the MSCI Canada Index.
    See more details

  • EWP WEEKLY

    EWP WEEKLY

    EWP - The iShares MSCI Spain Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Spanish market, as measured by the MSCI Spain Index.
    See more details

  • EZA WEEKLY

    EZA WEEKLY

    EZA - The iShares MSCI South Africa Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the South African equity market, as measured by the MSCI South Africa Index.
    See more details 

  • EWY WEEKLY

    EWY WEEKLY

    EWY - The iShares MSCI South Korea Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the South Korean market, as measured by the MSCI Korea Index.
    See more details

  • EWZ WEEKLY

    EWZ WEEKLY

    EWZ - The iShares MSCI Brazil Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Brazilian market, as measured by the MSCI Brazil Index.
    See more details

  • RSX WEEKLY

    RSX WEEKLY

    RSX - The Russia ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the DAXglobal® Russia+ Index. The Index provides exposure to publicly traded companies that are domiciled in Russia, and traded in Russia and/or on leading global exchanges. As such, the Fund is subject to the risks of investing in this country.
    See more details

  • EPI WEEKLY

    EPI WEEKLY

    EPI - WisdomTree India Earnings Fund seeks investment results that correspond to the price and yield performance, before fees and expenses, of the WisdomTree India Earnings Index.
    See more details

  • FXI WEEKLY

    FXI WEEKLY

    FXI - The iShares FTSE China 25 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the FTSE China 25 Index.
    See more details

  • 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.

Markets were rallied enough late to make the week look okay which was the intent of those who could do this. (Any guesses as to “who” those people or groups are?)

 

We’re still overbought especially now on an intermediate term basis as the NYSI demonstrates. We can still move higher with earnings and whatever else. But, with volume this light and conditions stretched Mr. Market is walking on eggshells. We’ll see you again next week.

 

Have a great weekend. For us we’re on a generator given an ice storm.

 

Let’s see what happens.

 

More from ETF Digest

 

 

Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current positions if any are embedded within charts. Active Portfolios: No Positions. Our Lazy & Hedged Lazy Portfolios maintain the follow positions: XLK, QQQ, XLY, MBB, XBI, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, & EWU.

The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs 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 annotations 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.


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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
Gold1,722.901.400.08 % 08:20
WTI Crude Futr99.56-0.14-0.14 %01/27
Index Quotes Change Change % Local
CRB317.570.150.05 % 01/27
US Dollar78.84-0.56-0.71 %01/27
Index Quotes Change Change % Local
VIX18.53-0.04-0.21 %01/27
MSCI Value Daily MTD YTD
Brazil3252.97-0.75 %15.08 % 15.08 %
Russia841.57-0.46 %14.23 % 14.23 %
India420.312.55 %21.13 % 21.13 %
China59.110.24 %11.88 % 11.88 %