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An overextended bull market can mean trouble when volume shrinks and there is little positive news flow. Such was what we experienced Monday and Tuesday. Light volume without supportive news invites trouble. Wise guys armed with sophisticated algorithms can hunt down protective stops while most participants are mere spectators.
It doesn’t help what news there is remains negative. China economic data posted Monday and ongoing corporate bond defaults continue to linger as the economy there worsens. Toss in a few surprises as the Senate Banking Committee passed a plan that would back existing mortgages but wind-down GSEs Freddie Mac (FMCC) and Fannie Mae (FNMA). The two stocks dropped nearly 30% after the news. And, it came as no shock after the Malaysian Airline disaster that Boeing (BA) would be under pressure upon learning the company had already been inspecting faults in the 777’s wing integrity.
There wasn’t enough, only $1.15 billion, in today’s Fed POMO action to juice prices.
Leading markets higher was av odd collection of ETF sectors: Greece (GREK), International REITs (RWR), Coffee (JO), Agriculture (DBA), Gold (GLD), and a variety of high grade bond ETFs (TLT).
Leading markets lower was a litany of ETF sectors: Materials (XLB), Energy (XOP), Industrials (XLI), Financials (XLF), Consumer Discretionary (XLY) Biotech (IBB), Small Caps (IWM), China (FXI), EAFE (EFA), Emerging Markets (EEM), Solar (TAN), Turkey (TUR) and need I continue?
The top 20 market movers by percent change in volume whether rising or falling is available daily.
Volume Tuesday was heavier than Monday which is typical of sell days. Breadth per the WSJ was negative.
Charts are either daily or weekly. Simple Moving Averages are 5 (red) & 10 (green). Proprietary high (HI) and low (LO) indicators can, but not always, indicate a reversal in the trend is at hand. Find out how you might profit by signing up to be a premium member now. Follow us on twitter and become a fan of ETF Digest on facebook.
Ongoing light volume can set markets up for trouble. Those algos are cruising markets like sharks smelling blood. Their targets are resting stops.
There won’t be any serious economic data until Thursday with Jobless Claims and Retail Sales.
Let’s see what happens.
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||99.23||-1.89||-1.87 %||02:00|
|US Dollar||79.91||0.03||0.03 %||17:00|
|Brazil||1979.751||0.13 %||-3.08 %||-10.75 %|
|Russia||616.895||-2.15 %||-10.61 %||-21.60 %|
|India||420.244||-0.53 %||3.94 %||3.18 %|
|China||58.605||0.03 %||-3.01 %||-7.13 %|