Markets Repeat January 2014
0
January 30, 2015

Our memories dim quickly with market behavior.

Hell, I can hardly remember yesterday or the news. But one thing is clear, although the names and places have changed, January 2014 was similar to January 2015. I’ll bet the S&P 500 closed down roughly 3% for each month. Many people also believe a poor January leads to a poor year overall but the data reveals a coin toss.

2014 didn’t end the year with outsized gains certainly but it did rise. Certainly conditions have changed this year as QE has ended and that will allow for more challenges. Another thing most may not remember is previous QE series 1 and 2 had a lag before the next round (QE 3) began but this year the Fed is doing and saying what it can to get out QE and ZIRP.

So the focus now is on when interest rates will be increased.

Thursday we saw an out of the blue rally as Yellen told democrats (transparency?) that the Fed won’t raise interest rates “immediately”. The triggered an algo generated short squeeze which was odd since “immediately” has not been a concern.

Friday the focus was on earnings and a loss of investor confidence as the 4th quarter GDP report showed it slowing to 2.6% vs 5% previously. There’s a lot to focus on why this occurred. First one fact remains clear, Obamacare was what consumers were most likely “forced” to spend their money on, well at least away from iGadgets.

1-30-2015 6-41-17 PM ZH

Of perhaps greater significance is the thorough and neutral analysis provided us by the Consumer Metrics Institute. They always publish first rate research and explain the confusion the Fed is in.

So despite some better data from Consumer Sentiment and Chicago PMI both were basically ignored. And earnings overall have been uninspiring away from a few tech names. The focus seems to be on the disconnect between Fed policy, bonds, commodities and what the Fed refers to as a strong economy. It leaves investors scratching their heads.

Leading market sectors higher included: Gold Miners (GDX), Gold (GLD), Silver (SLV), Energy (XLE), Crude Oil (USO), Volatility (VIX) and little else.

Leading market sectors lower included: Everything else.                                        

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

Volume on the day was elevated and breadth per the WSJ was decidedly negative.

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1-30-2015 6-41-58 PM Diary

 

 

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPY DAILY

    SPY DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU WEEKLY

    INDU WEEKLY

    Pick3

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • XLB WEEKLY

    XLB WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • XLU WEEKLY

    XLU WEEKLY

  • XLP WEEKLY

    XLP WEEKLY

  • XLV WEEKLY

    XLV WEEKLY

  • XLY WEEKLY

    XLY WEEKLY

  • XRT WEEKLY

    XRT WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • IYR WEEKLY

    IYR WEEKLY

  • IYT WEEKLY

    IYT  WEEKLY

  • CVY WEEKLY

    CVY WEEKLY

  • MUB WEEKLY

    MUB WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • BZF WEEKLY

    BZF WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • DBB WEEKLY

    DBB WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • DBC WEEKLY

    DBC WEEKLY

  • EFA WEEKLY

    EFA WEEKLY

  • IEV WEEKLY

    IEV WEEKLY

  • EEM WEEKLY

    EEM WEEKLY

  • EWG WEEKLY

    EWG WEEKLY

  • EWU WEEKLY

    EWU WEEKLY

  • EWW WEEKLY

    EWW WEEKLY

  • EWZ WEEKLY

    EWZ WEEKLY

  • EWY WEEKLY

    EWY WEEKLY

  • EPHE WEEKLY

    EPHE 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.

Looking at the VIX (Volatility Indicator) you can look back to January 2014 and know it never rose this high even though indexes performed similarly in 2015. What’s going on that might be different now.

To me, it’s Fed credibility. That’s being challenged now.

Our Aggressive Growth portfolio returned 18.68% while our Lazy Growth & Income Portfolio fell to -0.13%.

Let’s see what happens.

 

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...

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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
Gold1,284.6025.502.03 % 16:55
WTI Crude Futr47.693.167.10 % 16:21
Index Quotes Change Change % Local
CRB218.846.202.91 % 16:28
US Dollar95.080.110.12 % 16:43
Index Quotes Change Change % Local
VIX20.972.2111.78 % 16:14
MSCI Value Daily MTD YTD
Brazil1796.298-0.40 %-1.97 %-1.97 %
Russia409.287-2.66 %1.08 % 1.08 %
India543.718-0.64 %9.53 % 9.53 %
China67.892-1.27 %2.81 % 2.81 %