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Fade The Fed Day

David Fry's picture




 

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Bernanke must be scratching his bald head given the Bronx Cheer markets are sending Thursday. But it’s not just his speech that's affecting markets, it’s also what’s going on in China, Europe and Emerging Markets.

All market sectors save the higher dollar (UUP) collapsed after Bernanke’s speech Wednesday and then gave up the ghost Thursday. Bonds (TLT), all stock sectors, and indexes (SPY, DIA, IWM and so forth) hit the skids with heavy selling. This may mean the entire rally from November was just an artificial Fed-driven event. As former Quantum Fund Chief Investment Officer, Stan Drunkenmiller stated recently:

“Now, it's a possibility, but I would rather say that the market is rigged and people are chasing these assets, without growth necessarily backing confidence.”

Economic data Thursday was mixed: Jobless Claims soured to 354K vs 340K expected, and prior, revised to 336K; PMI Mfg Flash was okay at 52.2 vs 52.7 expected, and prior, 51.9; Existing Home Sales improved to 5.18 M vs 5 M expected, and prior, 4.97 M; Philly Fed Survey improved enough to indicate more tapering (?), 12.5 vs -1 expected, and prior, -5.2); and, Leading Indicators missed coming in at 0.1% vs 0.2% expected, and prior, 0.8%. A frustrated Bill Gross of PIMCO tweeted referring to economist Milton Friedman:

6-20-2013 6-42-43 PM TWEET

China’s PMI Flash seriously disappointed at 48.3 vs 49.1 estimated. This caused European shares to drop over 2% (PMI there was still sub-50 at 48.9) and Emerging Markets to fall even more. A developing story from China features a credit event with copper as financing ceases, creating a serious problem as noted in this story.

The litany of poor performing ETFs is too long to mention. However we did post two public chart videos on financials (XLF) HERE and gold (GLD) HERE.

 We’re only invested by 15% from 30% in our lead portfolio. For now we stay on the sidelines. 

Volume per the WSJ was high and breadth was so negative as to be 10//90. Are markets oversold? Yes short-term as the NYMO (McClellan Oscillator) will show.


6-20-2013 6-45-40 PM DIARY
 

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NYMO

NYMO

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

NYSI

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

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.

SPY 5 MINUTE

SPY 5 MINUTE

 

.SPX WEEKLY

.SPX WEEKLY

INDU WEEKLY

INDU WEEKLY

 

RUT WEEKLY

RUT WEEKLY

QQQ WEEKLY

QQQ WEEKLY

XLF WEEKLY

XLF WEEKLY

XLI WEEKLY

XLI WEEKLY

XLB WEEKLY

XLB WEEKLY

XLY WEEKLY

XLY WEEKLY

XLP WEEKLY

XLP WEEKLY

ITB WEEKLY

ITB WEEKLY

 

IYR WEEKLY

IYR WEEKLY

TLT WEEKLY

TLT WEEKLY

LQD WEEKLY

LQD WEEKLY

EMB WEEKLY

EMB WEEKLY

BWX WEEKLY

BWX WEEKLY

MUB WEEKLY

MUB 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

JJC WEEKLY

JJC WEEKLY

DBC WEEKLY

DBC WEEKLY

USO WEEKLY

USO WEEKLY

XLE WEEKLY

XLE WEEKLY

EFA WEEKLY

EFA WEEKLY

IEV WEEKLY

IEV WEEKLY

EEM WEEKLY

EEM WEEKLY

EWA WEEKLY

EWA WEEKLY

EWG WEEKLY

EWG WEEKLY

 

...

 

Did you know there’s a large POMO Thursday? And, did you know Friday is quadwitching? Do you care?

The table is set for a counter-trend rally Friday given these events.

But, as with any oversold or overbought condition, markets can remain that way for longer than you expect—just look at gold as an example.

Let’s see what happens.

 

 

 

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Thu, 06/20/2013 - 21:39 | 3677580 TalkToLind
TalkToLind's picture

$19.34/oz silver, damn!  I want to shoot my wad and grab up 100 oz of physical so fucking bad...

Thu, 06/20/2013 - 21:32 | 3677560 razorthin
razorthin's picture

Emerging Markets bichez.  Way the fuck overdone and will be the next best place to park along with metals&mining when the fed yells, "psych!".

Thu, 06/20/2013 - 20:56 | 3677460 Lmo Mutton
Lmo Mutton's picture

FU Bernanke

 

Thu, 06/20/2013 - 21:27 | 3677545 Trampy
Trampy's picture

whassa matter?  already jonesin for money injections even though it's still flowin?

thass pseudo-addiction, not the real thing.

 

Thu, 06/20/2013 - 20:24 | 3677387 Everybodys All ...
Everybodys All American's picture

I think you could see a counter trend rally but only if the ten year rallys. Though I would sell every one of these rips. Markets never go straight down and they do go down hard when you least expect.

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