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October 24, 2014

10-24-2014 8-25-14 PM Draghi

Market news Friday wasn’t as great as the upbeat performance would suggest.

China stocks fell the most with Shanghai Composite falling 1.7% for the week, the most in four months. The housing bubble in China is also popping as 69 of 70 major cities reported price declines. In Europe the Eurozone reported GDP may only reach 0.2% while the UK reported GDP growth of only 0.7%. An astounding 25 banks in Europe also failed their (open book) stress tests. And not to be forgotten, French unemployment made a new high with 3.43 million out of work.

In the U.S. headlines hailed better New Home Sales which was frankly amusing when even a cursory look at the numbers would make you scratch your head. The data showed New Homes Sales of 467K vs 460K expected & prior 466K reduced from prior 504K. That’s right, based on prior adjustments New Home Sales beat prior and expectations which is one of those “how to lie with statistics” deals.

So why did stocks rally?

In the midst of all this crummy data, CNBC rolled-out some commentary from one of the chief QE talking head proponents, the ECB’s Mario Draghi. His comments lit a fire under bulls and algos where terms like “more stimulus” are in the code.

DRAGHI CALLS FOR STIMULUS: CNBC

DRAGHI SAYS JOINT EFFORT NEEDED TO AVOID RECESSION: CNBC

DRAGHI SAYS INFLATION TO REMAIN LOW IN THE NEAR TERM: CNBC

This is really all you need to know beyond the fact that as of now, October is still in the red. And, no matter all the talk, QE in the U.S. is scheduled to end this month. And, unless they have a change of heart, that’s what’s going to happen. We’ll see how the markets deal with this unless bulls rely on the less than reliable Draghi to grab the Fed’s baton and launch a real effort.

For those who must invest, following the tape and putting the BS out of your mind is the only way to fly.

Leading market sectors higher included: S&P 500 (SPY), Tech (QQQ), Dow (DIA), Financials (XLF), Materials (XLB), Industrials (XLI), Semiconductors (SMH), Healthcare (XLV), Biotech (IBB), Consumer Staples (XLP), Utilities (XLU), Transportation (IYT) Emerging Markets (EEM), EAFE (EFA), Brazil (EWZ), Australia (EWA), Malaysia (EWM), UK (EWU), Europe (IEV), Russia (RSX), Thailand (THD), India (EPI) and Agriculture Producers (MOO).

Leading market sectors lower included: Junior Gold Miners (GDXJ), Energy (XLE), Retail (XRT), Taiwan (EWT) Indonesia (IDX), Crude Oil (USO), Base Metals (DBB), Agriculture (DBA), Commodity Tracking (DBC) and Natural Gas (UNG).                                                                           

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

Volume was comparatively light and breadth per the WSJ was positive.

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10-24-2014 9-01-05 PM Diary

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPX WEEKLY

    SPX WEEKLY

  • INDU DAILY

    INDU DAILY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY


  • XLB WEEKLY

    XLB WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • XLP WEEKLY

    XLP WEEKLY

  • XLV WEEKLY

    XLV WEEKLY

  • IBB WEEKLY

    IBB WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • IYR WEEKLY

    IYR WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • DBB WEEKLY

    DBB WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • DBA WEEKLY

    DBA WEEKLY

  • EFA WEEKLY

    EFA WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • EWA WEEKLY

    EWA WEEKLY

  • EWG WEEKLY

    EWG WEEKLY

  • EWU WEEKLY

    EWU WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • THD WEEKLY

    THD WEEKLY

  • RSX WEEKLY

    RSX WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • PEK WEEKLY

    PEK 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.

 

 

Closing Summary

The month of October is still in the red but that can be changed quickly with 5 trading days left in the month. Many earnings beats we’ve witnessed over the past couple of weeks have featured companies who succeeded in doing so as they reduced share float through stock buybacks. I know for many investors this isn’t as important as the end result. But this is short-term thinking since companies aren’t investing in long term growth rather than short-term gains. But senior executives, paid by lucrative stock options, love it.

Next week is loaded with more earnings and economic data so bulls have a chance to reclaim the tape just as they did this week. This is the best season as most know.

Let’s see what happens.

You can follow our pithy comments on twitter and become a fan of ETF Digest on facebook

...

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: 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
Gold1,232.00-0.90-0.07 %10/24
WTI Crude Futr81.30-0.79-0.96 %17:14
Index Quotes Change Change % Local
CRB270.22-2.21-0.81 %10/24
US Dollar85.79-0.17-0.19 %10/24
Index Quotes Change Change % Local
VIX16.11-0.42-2.54 %10/24
MSCI Value Daily MTD YTD
Brazil2072.2844.41 %-4.52 %-6.58 %
Russia570.3040.13 %-6.68 %-27.52 %
India500.1160.00 %-0.10 %22.79 %
China62.128-0.12 %0.75 % -1.55 %