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Markets A Meat Grinder For Traders
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February 23, 2016

Global equity markets had been rising along with crude oil prices. No more, at least this day.

Saudi Arabia oil minister quashed hopes of production cutbacks by saying such would not happen. That was a blow for bulls as markets are once again a meat grinder for traders seeking to find a durable trend. The trading environment remains a sharply two-way affair punishing traders. It prompted Geneva Swiss Band to suggest that we’re back in conditions similar to January 2008. If that pans out, it should send a shiver down your spine.    

The old expression for traders and investors alike is “supportive news should follow the trend”. Today’s news undid any support at least for Turnaround Tuesday.

It may very well be that a Shanghai Accord of some form may take place as early as this weekend. That could be as significant as the Plaza Accord of many decades ago. Should that take place it might mean global negative interest rates combined with QE and major currency valuation changes.

I’ve been saying for some time the “upside” from previous lows was between S&P 500 1902 to 1956. We have come very close to the higher figure only to fall from it twice. Also entering the price projection game was Tom DeMark who posited the market could decline to 1789 should the S&P close below 1926 this day (which it did) or close less than 1917 Wednesday or Thursday then a sudden move lower is at hand.

And so the projecting business goes.

And, not that it matters given market sloppiness and high volatility economic data again Tuesday was weak as Consumer Confidence fell sharply to 92.2 vs prior 97.8; Richmond Fed Mfg Index fell to -4 vs prior 2; and, the Case-Shiller Home Price Index was flat as were Existing Home Sales.

Another bad report came from JPM’s Jamie Dimon who warned a 25% decline in Capital Markets Revenue was ahead. This led to a route in bank ETFs.

Market sectors moving higher included: Volatility (VIX), Treasury Bonds (TLT), Gold (GLD), Gold Stocks (GDX), Silver (SLV).

Market sectors moving lower included: Oil (USO) and a litany of other sectors.

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).

2-23-2016 3-33-24 PM

Volume was light once again on selling clearly displaying confusion and tentativeness of traders. Breadth per the WSJ was negative.

2-23-2016 3-34-12 PM

 

12-17-2015 9-04-44 PM Chart of the Day

 

 

 

2-23-2016 3-49-58 PM KRE

 

Charts of the Day
  • SPY 5 MINUTE

    SPY  5  MINUTE

  • SPX DAILY

    SPX DAILY

  • SPX WEEKLY

    SPX WEEKLY

  • INDU DAILY

    INDU DAILY

  • INDU WEEKLY

    INDU WEEKLY

  • RUT WEEKLY

    RUT WEEKLY

  • NDX WEEKLY

    NDX WEEKLY

  • XLB WEEKLY

    XLB WEEKLY

  • XLE WEEKLY

    XLE WEEKLY

  • XLF WEEKLY

    XLF WEEKLY

  • XLI WEEKLY

    XLI WEEKLY

  • XLU WEEKLY

    XLU WEEKLY

  • ITB WEEKLY

    ITB WEEKLY

  • IYR WEEKLY

    IYR WEEKLY

  • XRT WEEKLY

    XRT WEEKLY

  • IBB WEEKLY

    IBB WEEKLY

  • HYG WEEKLY

    HYG WEEKLY

  • TLT WEEKLY

    TLT WEEKLY

  • UUP WEEKLY

    UUP WEEKLY

  • FXE WEEKLY

    FXE WEEKLY

  • FXB WEEKLY

    FXB WEEKLY

  • GLD WEEKLY

    GLD WEEKLY

  • GDX WEEKLY

    GDX WEEKLY

  • SLV WEEKLY

    SLV WEEKLY

  • DBB MONTHLY

    DBB MONTHLY

  • USO MONTHLY

    USO MONTHLY

  • EFA WEEKLY

    EFA WEEKLY

  • IEV WEEKLY

    IEV WEEKLY

  • EEM

    EEM

  • 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 has changed due to a variety of new factors including HFTs, new VIX linked ETPs and a multitude of new products to leverage trading and change or obscure prior VIX relevance. 

 

DeMark got his call. Let’s see if that works for him. During the period of QE, he hasn’t been right which affected many chartists beyond him.

Let’s see what happens. 

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Dave Fry is founder and publisher of ETF Digest and has been covering U.S. and global ETFs since 2001.

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ETF Digest was awarded one of the most informative ETF websites in the10th Annual Global ETF Awards.



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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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