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Tempting Bulls Want To Lure You Back In
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March 03, 2016

3-3-2016 2-57-40 PM2

I’d say this light volume rally causes me to be wary.

Seriously, where’s the supporting news for this rally?

Earnings ahead are going to be lower and economic data remains weak. But, there will be more cheaply financed stock buybacks. Is that the only news? We’re still waiting.

Brazilian economic downturn took a real turn for the worse in February,"according to Markit's Composite PMI, which collapsed to record lows at 39.0. Despite a slightly less bad than expected GDP print this morning (still down a record 5.89% YoY), hope was quickly extinguished as PMIs showed economic activity continuing to contract at a record pace, job losses accelerating, and manufacturing's collapse accelerating.

As Markit sums up,"With the global economy also showing signs of slowing, which will impact on external demand, it looks as if the downturn is set to continue to run its course in the coming months."

That news allowed the Brazil ETF to rally nearly 7.5%. What!? Yeah, things are getting irrational. Below are some Brazilian economic charts courtesy of ZH.

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3-3-2016 3-02-58 PM

What else was going on Thursday?  PMI Services Index fell below a critical level to 49.7 vs prior 53.2; ISM Non Mfg Index fell slightly to 53.4 vs prior 53.5.

Factory Orders rose to 1.6% vs prior -2.9% and Productivity fell to -2.2% and Costs rose to 3.3% which isn’t good.

Oil prices fell Thursday and so did the dollar which led to increases in gold prices. The weird thing about the latter came from Canada. The country had always been a reservoir of hard assets. Today it was announced the country had liquidated its entire inventory of gold. This shocked most investors. It may be the new government of Trudeau and his more socialist policies at work.

Investors are anxiously awaiting Friday’s Employment Report.

Market sectors moving higher included: Small Caps (IWM), Financials (XLF), Banks (KBE), Regional Banks (KRE), Consumer Discretionary (XLY), Industrials (XLI), Energy (XLE), Energy MLPs (AMLP) Consumer Staples (XLP), Retail (XRT, Europe (VGK), Midcaps (MDY), EAFE (EFA), Brazil (EWZ), South Korea (EWY), Australia (EWA), Russia (RSX), India (EPI), Canada (EWC), Emerging Markets (EEM), Gold (GLD), Gold Stocks (GDX), Silver (SLV) and many others.

Market sectors moving lower included: Volatility (VIX), Biotech (IBB), Crude Oil (USO).

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).

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

 

 

 

3-3-2016 3-09-10 PM EWZ

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

  • 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. 

 

The commentary shortened as we await Friday’s Employment Report.

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.

Top 50 Investing Blogs.

Top 25 Best ETF Newslettersin 2015.

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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