Bad News Is Good News Again
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February 07, 2014

2-7-2014 6-21-34 PM bad news

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The Employment Report for January proved to be a large miss with only 113K new jobs created vs 185K expected, and prior, revised from the low of 74K to 75K. The unemployment rate fell from 6.7% to 6.6%, but this is an unreliable level given how many people are off the employment rolls. Some cheered the fractional the better participation rate from 62.8 to 63. The bottom line was the report was much worse than expected and just plain bad. Despite Fed governor claims to the contrary, some believe the taper will stop shortly given this miserable report.

Consumer Credit rose sharply to $18.8 billion vs the $12.00 billion expected, and prior $12.4 billion. Revolving credit was sharply higher at $5 billion but Student Loans--a bubble--still comprise the greatest percent of the gain. The chart below shows credit rising while the debt-to-income ratio remains poor.

2-7-2014 7-23-12 PM Consumer Credit

Our staff also puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume. This is a tool that investors can use to shorten their search for suitable ETFs, without being dominated by typical high volume issues or leveraged and/or inverse ETFs.

Markets were sharply higher overall putting in the best two-day rally in four months. Everything rallied except for bonds. As I indicated yesterday bulls were determined to close what was a bearish week, green. They accomplished this with the exception of Transportation and Small Caps. Away from equities, bonds (TLT), and the dollar (UUP), other sectors did little.

Leading the charge higher was every sector that was down previously so there’s little point of posting a litany of these names. The only point I’d make is that Emerging Markets (EEM) in general underperformed.

Volume is still high as markets rallied, squeezing whatever shorts remained. Breadth per the WSJ was quite positive.

2-7-2014 7-02-27 PM DIARY

Below are chart presentations for daily top 5 ETF market movers, rising and falling, by percentage change in volume for each category. To permit better discovery inverse or leveraged issues are not included. Market movers are a tool investors can use to shorten their search for suitable ETFs, without being dominated by the usual high volume issues.

2-2-2014 4-41-47 PM Learn moreCharts 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.

Charts of the Day
  • SPY 5 MINUTE

    SPY 5 MINUTE

  • SPY DAILY

    SPY DAILY

  • .SPX WEEKLY

    .SPX WEEKLY

  • INDU DAILY

    INDU DAILY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • NYMO

    NYMO

    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

    NYSI

    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

    VIX

    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.


     

  • SIL

    SIL

    Global X Silver Miners ETF (SIL) saw great gains Friday which took the weekly chart shown above to positive from unchanged. It did so by demonstrating the greatest change in volume from the previous period.  In sum, Friday allowed the weekly chart to close at its highest point for this overall move.

  • GDXJ

    GDXJ

    Van Eck Junior Gold Miners (GDXJ) also is featured on weekly charts with them making a significant high for this move dating back to January 1, 2014. These precious metals miners seem to be moving in the same manner.

  • IBB

    IBB

    iShares NASDAQ Biotech ETF (IBB) has been a volatile sector as noted by this daily chart view. We’ve been long IBB for nearly a year but traders will want to focus their views on the daily chart high (HI) which can give them a good enough tip as to when a reaction in the trend is near or even a top as noted here.

  • FDN

    FDN

    First Trust Internet ETF (FDN) is displayed in this daily chart since the previous high (HI) from 12-27-13 basically identified an impending trading range. The ETF is dominated by Google (GOOG), Amazon (AMXN) and Expedia (EXPE) among others. It’s been a core member of our Growth & Income Portfolio. 

  • EPU

    EPU

    iShares MSCI All Peru Capped Index ETF (EPU) is displayed here in a daily chart view. EPU trades correlated with gold and gold shares. Weekly charts aren’t showing as much progress to the upside as this daily chart now shows. Investors would have to keep a close eye on gold and gold stocks for tell-tale signs of gathering strength here as well.

  • UNG

    UNG

    United States Natural Gas ETF (UNG) is shown here in a daily chart format given the extraordinary level of volatility seen of the past two weeks. All one can say about the trading is that it’s changed wildly from day to day.


     

  • HDGE

    HDGE

    AdvisorShares Ranger Bear ETF (HDGE) is displayed on this daily chart. We’ve used it as a hedge for large against long positions we wish to hold for the long-term. Hedging is merely insurance you wish to have for protection but never wish it to succeed too well. That’s how we view it.

  • TUR

    TUR

    iShares MSCI Turkey ETF (TUR) is presented on the weekly chart. You’ll note the possibly impressive low (LO) which indicates a bottom may be in place for politically troubled Turkey.

  • VNM

    VNM

     


    Market Vectors Vietnam ETF (VNM) has seen significant investment inflows during the last quarter of 2013. It seemed to be overbought and ripe for a correction as this daily chart with an effective high (HI) on January 17, 2014. Since that time investors have cooled to it partially because the U.S. Farm Bill may restrict exports of fish.

  • EBND

    EBND

    SPDR Emerging Market Local Bond ETF (EBND) is shown on this daily chart. It had been declining since local currencies have been under great pressure. A low (LO) was indicated for early February but seemed premature until two weeks later when a rally occurred. It’s in the declining category as heavy relative volume was indicated just this week.


     

 

 

Closing Summary

Even though most Fed speakers this week expressed their commitment to more tapering it seems bulls didn’t get or believe the message. No matter the spin from bulls the employment report was dreadful. Some bulls had hoped the December employment report was just an outlier. Evidently such was not the case.

The data overall has been disappointing and earnings news overall haven’t been stellar especially when it comes to company revenues. We’ll only have a week or two of earnings left to analyze and most of this will come from retailers.

Measured by the DJIA we’re still down 5% on 2014. Emerging markets, with a brief rally, are still having problems so going forward what will help them? I think only a pause in tapering. We’ll be hearing from new Fed Chair Yellen next week and that should be interesting.

Economic data next week is highlighted by Jobless Claims, Retail Sales (Thursday), Industrial Production and Consumer Sentiment (Friday).

Let’s see what happens.

 



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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

 

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