The other “no” was given by the Alibaba (BABA) selling group to retail investors trying to get some issues at the$68 IPO price. Of course, there was enough arm-twisting by the huge selling group members to their best clients to buy BABA or else never see another deal again. This allowed for oversubscribed conditions as BABA opened at $92 making some IPO buyers instant gains of at least 35%. You retail suckers had to pay up mightily as the stock rose as high as $99.60.
Alibaba has its naysayers who don’t like the structure of the deal with long time emerging markets leader Mark Mobius to pan the stock due to its strange structure.
With quadwitching on deck markets were more volatile than recently which is typical of these events. Stocks were mixed and many sectors were quite weak as outlined on the list of market sectors below. But it should be emphasized that many of the same markets referred to have been weak all this week. This is a disturbing sign for markets to separate significantly like this.
The dollar rose sharply once again defying expectations of a “no” vote leading to a weaker dollar and higher pound and euro. All of this continues to crush most commodity sectors which have been in decline most of third quarter.
Leading market sectors higher included: Bonds (TLT) and Dollar (UUP).
Leading market sectors lower included: Financials (XLF), Banks (KBE), Regional Banks (KRE), Energy (XLE), Industrials (XLI), Homebuilders (ITB); Retail (XRT), Semiconductors (SMH), Materials (XLB), Small Caps (IWM), Mid-Caps (MDY), Small Cap Value (IWN), Solar (TAN), China (FXI), Australia (EWA), India (EPI), Brazil (EWZ), Canada (EWC), Turkey (TUR), Emerging Markets (EEM), Multi-Asset Dividend (CVY), International REITs (RWX), Coal Producers (KOL), Gold (GLD), Gold Miners (GDX), Agriculture (DBA) and Commodity Tracking ETF (DBC).
The top 20 market movers by percentage change in volume whether rising or falling is available daily.
Volume increased given quadwitching but breadth per the WSJ was negative.
Quadwitching can certainly mislead investors as to market trends and how they might be disrupted artificially by a mechanical event. And sure, the Scottish “no” vote and the noise surrounding Alibaba’s IPO (including how rigged it was away from retail investors) cleared the deck of some major issues. But what is troubling is how poorly international markets are performing away from US headline indexes like the Dow or S&P 500. This kind of action cannot persist for long.
It wouldn’t surprise me to see some currency intervention by central banks to stem the rise in the dollar and squeeze some leveraged shorts in some currency markets.
Let’s see what happens.
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".
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
|WTI Crude Futr||92.45||-0.62||-0.67 %||17:14|
|US Dollar||84.93||0.54||0.63 %||09/19|
|Brazil||2397.014||-1.10 %||-10.97 %||8.06 %|
|Russia||635.075||-1.54 %||-2.12 %||-19.29 %|
|India||514.619||0.04 %||1.25 %||26.35 %|
|China||65.043||0.21 %||-1.65 %||3.08 %|