Algos Sprint To Year-End Finish
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December 19, 2014

Stocks meandered about most of Friday as news was scant.

But the 2:15 Buy Program Express engaged tentatively and allowing stocks to burst temporarily then fade some into the close as algos booked profits.

All this was done over a three day period as stocks wiped-out the markets previous 5% decline.

All this took only a few words from Yellen the other day which included: “considerable time”, “patience” and “transitory”. These are now embedded in the algos programmable lexicon.

Many stories this week appeared with pundits making statements like, “markets are rising due to faith the central banks will remain supportive”.

And so it goes.

There’s not much news Friday to wrap-up a volatile but bullish week. Its likely bulls are looking to manage market behavior until year’s end to obtain their bonuses and make conditions look better for their clients.

The only amusing notes came from Obama who stated Sony should not have pulled that movie (I guess the family wanted to watch it on the way to Hawaii) and an absurd comment that the Keystone Pipeline wouldn’t have any benefit for American consumers.

Leading market sectors higher included: Energy (XLE), Biotech (IBB), Transports (IYT), Solar (TAN), Multi-Asset Income (CVY), Value (VTV), Homebuilders (ITB), Australia (EWA), Bonds (TLT), High Yield Bonds (HYG), Brazil (EWZ), Canada (EWC), Japan (EWJ), UK (EWU), Emerging Markets (EEM), Russia (RSX), Agriculture Producers (MOO), Metals & Mining (XME), Crude Oil (USO), Base Metals (DBB) and The Dollar (UUP).

Leading market sectors lower included: Gold Miners (GLD), Utilities (XLU), Retail (XRT), Consumer Staples (XLP), China (FXI), India (EPI), Germany (EWG), Europe 350 (IEV), Small Cap Emerging Markets (EWX), Thailand (THD), Vietnam (VNM) and Natural Gas.                                                                       

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

Volume was once again high and breadth per the WSJ was positive. But looking down at the Money Flow summary there was plenty of outflow which is a divergence.

12-19-2014 5-56-56 PM Diary

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

  • XLF WEEKLY

    XLF WEEKLY

  • XLB WEEKLY

    XLB WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • XLP WEEKLY

    XLP WEEKLY

  • XRT WEEKLY

    XRT WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

  • XLV WEEKLY

    XLV WEEKLY

  • IBB WEEKLY

    IBB WEEKLY

  • CVY WEEKLY

    CVY WEEKLY

  • HYG WEEKLY

    HYG WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDXJ WEEKLY

    GDXJ WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • DBB WEEKLY

    DBB WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • DBC WEEKLY

    DBC WEEKLY

  • EFA WEEKLY

    EFA WEEKLY

  • EEM WEEKLY

    EEM WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • EWG WEEKLY

    EWG WEEKLY

  • EWU WEEKLY

    EWU WEEKLY

  • EWJ WEEKLY

    EWJ WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • RSX WEEKLY

    RSX WEEKLY

  • EPI WEEKLY

    EPI WEEKLY

  • 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.

 

 

Closing Summary

If you look at the charts I’ve outlined the past two months using monthly charts you’ll see the destruction in many markets.

Clearly, currencies, commodities, precious metals, high yield dividend plays and others display what many are feeling about the failure in portfolio diversification and performance.

The central banks, with the Fed in the lead, have taken over markets and not letting them find a natural path to winning or losing.

In many ways markets are being managed and the financial media is doing a poor job of explaining it to Main Street.

This makes our job that much more difficult since often we can be out of step with more powerful forces. Eventually all these issues will come home to roost and then there will be hell to pay. In the meantime follow the tape at the expense of emotions and fundamental beliefs.

The next two weeks will experience lighter volume and, one would imagine, a bullish bias given the holidays.

I’ll be posting less or even little then. Should events dictate I’ll comment on them.

Have a great holiday period!

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.

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
Gold1,196.80-2.10-0.18 %16:55
WTI Crude Futr56.522.414.45 % 14:29
Index Quotes Change Change % Local
CRB240.292.421.02 % 16:27
US Dollar89.850.400.44 % 16:02
Index Quotes Change Change % Local
VIX16.49-0.32-1.90 %16:14
MSCI Value Daily MTD YTD
Brazil1776.4730.88 %-14.07 %-19.91 %
Russia412.9245.41 %-22.44 %-47.52 %
India486.6592.29 %-7.83 %19.48 %
China63.4981.24 %-2.74 %0.63 %