Like Bill Murray it feels like a bad Groundhog’s Day again as markets moved right back down in volatile, what I believe, is a descending spiral.
For bulls, just when you think markets are ready for a big time rally, (nearly 400 points higher just last Friday), bears moved back in taking charge once again. I further projected on just last week Thursday we could expect a countertrend rally in the S&P from 1902 to 1956. We hit 1940 on Friday and have fallen once again to close at 1904.
There wasn’t much in the way of economic data on Turnaround Tuesday but the focus remained on crude oil (down) and China (down). Crude oil fell sharply on the news that not much is going to happen with OPEC and others regarding lessening output. China meanwhile is dramatically increasing policies to forestall the inevitable—an economic collapse. Bloomberg details some of their market interference here and here.
Other news perhaps flying below the radar is the seriously weak state of the retail industry as featured in this article. And, what the hell and not to pile-on the bad news but the next linked article features a rundown of contemplated layoffs for the tech sector. Naturally, this doesn’t include other industries. And, it’s always good to remember layoffs are potentially good news for those companies unless you work there.
I’ve already provided too much negative homework, so let’s just go straight to the winners and losers this day.
Market sectors moving higher included: Volatility (VIX), Treasury Bonds (TLT), Utilities (XLU) and little else.
Market sectors moving lower included: Everything else.
Below is the heat map from Finviz reflecting those ETF market sectors moving higher (green) and falling (red). Dependent on the day (green) may mean leveraged inverse or leveraged short (red).
Volume rose on selling and breadth per the WSJ was quite negative.
One of the more serious warnings taking place was from the Fed on Tuesday. It was reported the Fed is conducting an impact study on how their client banks would handle negative interest rates.
This implies to me they’re thinking of doing it as Fed Vice-Chair Fischer said, “…foreign central banks that had resorted to negative interest rates to stimulate their economies (read: “stock markets”) had been more successful than he anticipated.” Should this actually take place, head to your nearest gold coin dealer and load the wagon.
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.
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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