ADP Data Employment Data was lower (198K vs 215K prior) while Factory Orders were weaker (-2% vs 1.8% prior). The Fed’s Beige Book showed little change from previous reports—economy growing modestly and inflation is tame.
Markets reacted without much conviction either way and for the most part took a break even as POMO was fully operational. One sector leading markets higher were financials, which we profiled in today in a short video highlighting SDPR Financial ETF (XLF). As premium subscribers know, we’ve been pretty active in XLF and are looking to add to our existing positions.
With so much action within markets lately it’s good that colleague David Gillie wrote his Midweek Peek featuring profiles of a few dozen ETFs that are making new highs or lows.
The ETF Digest launched our 7th portfolio on Monday March 4th -- The All-Weather Portfolio – using our own selection of ETFs. I believe it can be a good core portfolio option for those not wanting frequent trading activity and who seek a uncorrelated portfolio structure of constituents. Since Monday’s launch the portfolio is up .45%.
Other market sectors with some action Wednesday included a stronger dollar (UUP) against a weaker euro (EUO). Even with the dollar higher, gold (GLD) managed a small rise of $8.00 supposedly due to the modest readings from the Fed’s Beige Book. Nevertheless, copper (JJC) was weaker while oil (USO) prices also fell. With energy lower, the premier commodity tracking ETF (DBC) was also lower again.
The DJIA (DIA) continued to set another high aided by gains in the highest priced stocks (IBM, MCD, MMM, CVX and BA). The next target for bulls is the S&P 500 Index, which is less than 20 points away from new highs. At the same time, bonds (TLT) were once again weak.
Volume was quite light and perhaps investors are holding back for Friday’s employment data. Breadth per the WSJ was modestly, like the Beige Book, positive.
Continue to U.S. Sector, Stocks & Bond ETFs
Continue to Currency & Commodity Market ETFs
Continue to Overseas Sectors & ETFs
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.
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.
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.
Continue to Concluding Remarks
Jobless Claims, International Trade and Productivity and Costs are on tap for Thursday. We still have a handful of large retailers set to report as earnings season ends.
With the S&P 500 record near it’s likely to be acquired which is par for the course.