Messy Market Closes Up In May
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May 30, 2014

5-30-2014 4-14-14 PM mr  Messy

Economic data Friday included Personal Income & Spending which was highlighted by a negative (-0.1%) reading in spending; a great Chicago PMI report (65.5 vs prior 63) but featured an increase in prices paid and an employment decline; and a slight rise in Consumer Sentiment to (81.90 vs prior 81.80).

Stocks struggled all day Friday as some early to the party took profits and left for the weekend. Friday’s can be like that often. Most market action historically takes place Tuesday-Thursday barring unusual event days. But hey, markets are a little different these days wouldn’t you agree? Some pundits are getting hip to the idea that complacency (see VIX below) is getting a little long in the tooth. FT's Gillian Tett notes that, as we have vociferously explained, almost every measure of volatility has tumbled to unusual low levels, "this is bizarre," she notes, "financial history suggests that at this point in an economic cycle, volatility normally jumps."

"Investors in the options markets are not pricing in any big macro risks. This is very unusual." In reality, as Hyman Minsky notes, “market tranquility tends to sow the seeds of its own demise and the longer the period of calm, the worse the eventual whiplash”. But, again this Fed-fueled ZIRP and QE market is nothing like we’ve seen before. Oh wait, that’s ending right?

Its obvious markets enjoyed an excellent month of May but you don’t need me to point that out. And, pulling out a worn hackneyed phrase “sell in May and go away” sometimes works and then doesn’t. But now we enter June with markets stretched and the Fed reducing (oh, the horrors of it!) QE even further.

Leading market sectors higher included: Retail (XRT), REITs (ICF), Utilities (XLU), Consumer Staples (XLP), Semiconductor (SMH), Nuclear Energy (NLR), Italy (XLI), China (FXI), Spain (EWP), Nickel (JJN) and Aluminum (JJA)

Leading market sectors lower included: Small Caps (IWM), Homebuilders (ITB), Biotech (IBB), Metals & Mining (XME), Steel (SLX), Silver Miners (SIL), Emerging Markets (EEM), South Korea (EWY), Taiwan (EWT), Brazil (EWZ), Mexico (EWW), Latin America (ILF), Turkey (TUR), India (EPI), Russia (RSX), Indonesia (IDX), Gold (GLD), Crude Oil (USO), Coal Producers (KOL), Solar (TAN), Silver (SLV), Agriculture (DBA) and Natural Gas (UNG).

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

5-30-2014 7-05-38 PM Diary

Volume remains light and breadth per the WSJ was mostly negative.

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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

  • SMH WEEKLY

    SMH WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • ICF WEEKLY

    ICF WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • FXU WEEKLY

    FXU WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • VTV WEEKLY

    VTV WEEKLY

  • TTFS WEEKLY

    TTFS WEEKLY

  • LVL WEEKLY

    LVL WEEKLY

  • EMB WEEKLY

    EMB WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXY WEEKLY

    FXY WEEKLY

  • FXA WEEKLY

    FXA WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • DBB WEEKLY

    DBB WEEKLY

  • DBA WEEKLY

    DBA WEEKLY

  • USO WEEKLY

    USO WEEKLY

  • VEA WEEKLY

    VEA WEEKLY

  • VGK WEEKLY

    VGK WEEKLY

  • EEM WEEKLY

    EEM WEEKLY

  • EWA WEEKLY

    EWA WEEKLY

  • EWY WEEKLY

    EWY 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

Markets finished May with good gains with most of these achieved the last week of the month on ultra-light volume.

Some observers, like the FT’s Gillian Tett are scratching their heads about how complacent investors are.

The truth seems to be, volume indicates there aren’t many investors who are complacent, just hedge funds and HFTs picking each other’s pockets.

June will begin with plenty of economic data including Friday’s Employment Report and the ECB’s policy meeting midweek.

There isn’t much earnings data until after the July holiday and volume should become lighter, if that’s possible.

Have a great weekend and let’s see what happens.

You can follow our pithy comments on twitter and become a fan of ETF Digest on facebook.

...

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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