Seeking Alpha
, ETF Digest (122 clicks)
Newsletter provider, portfolio strategy, ETF investing, long/short equity
Profile| Send Message|
( followers)  

(click to enlarge)

5-16-2013 3-57-29 PM doh

If investors were only reading fundamental economic news, they'd be running for the hills. But that's not the way this market rolls, for the worse the data, the better or bullish are markets. Of course, this is about the durability of QE from the Fed and other central banks. You might just as well put away the "taper caper" for now since the Fed isn't going to reduce asset purchases when economic data is this consistently dreadful. (Oh wait, I wrote this too soon. Fed Governor John Williams spoke, saying the Fed "may reduce QE this summer but that slowing QE wouldn't be tightening. Up is down, down is up. D'OH!!)

Thursday stocks shook off the crummy data early as the litany of economic reports, well, sucked. Market veterans take note; the chart below courtesy of Zero Hedge speaks volumes about the disconnect between economic data and market action:

(click to enlarge)

Jobless Claims soared to 360K vs. 330K expected, and prior revised higher to 338K. Housing Starts dropped over 16% to 853K vs. 969K expected, and prior 1.036M. Meanwhile, Permits, which may never become "starts," rose to 1.01M vs. 945K expected, and prior 902K. The CPI showed continued deflation, -0.4% vs. -0.3% expected, and prior -0.2%, while the so-called "core" rate was modest at -0.1% vs. 0.2% expected, and prior 0.1%. Finally, the important Philly Fed Survey plunged to -5.2 vs. 2.2 expected, and prior 1.3. These reports followed on the heels of recessionary data from the eurozone Wednesday.

Earnings reports were mixed. Walmart (NYSE:WMT) was weak, Macy's (NYSE:M) beat and Kohls (NYSE:KSS) confused. Cisco (NASDAQ:CSCO) soundly beat earnings, allowing the networking sector (NYSEARCA:IGN) to rally sharply. Software (NYSEARCA:IGV), with the help of MSFT, a hedge fund favorite, gained. Watch today's quick video analyses of IGV here.

As noted, early in the day markets were barely higher but as the closing bell neared, selling hit the tape. It is "Options Expiration Friday" and some of this stuff can tentatively begin Thursday.

Equity markets sunk at the bell and leading sectors included too few to mention. Modest profit-taking hit throughout all market sectors. Bonds (NYSEARCA:TLT) rallied after seeing rotation-based selling throughout the week. The dollar (NYSEARCA:UUP) was flat overall, and gold's (NYSEARCA:GLD) persistent selling moderated only slightly.

Volume was still light, and breadth per the WSJ was negative.

(click to enlarge)

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

$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

FDN WEEKLY

FDN WEEKLY

IGN WEEKLY

IGN WEEKLY

SOXX WEEKLY

SOXX WEEKLY

XLF WEEKLY

XLF WEEKLY

XRT WEEKLY

XRT WEEKLY

XLI WEEKLY

XLI WEEKLY

ITB WEEKLY

ITB WEEKLY

IYT WEEKLY

IYT WEEKLY

IEF WEEKLY

IEF WEEKLY

TLT WEEKLY

TLT WEEKLY

UUP WEEKLY

UUP WEEKLY

FXE WEEKLY

FXE WEEKLY

GLD WEEKLY

GLD WEEKLY

GDX WEEKLY

GDX WEEKLY

SLV WEEKLY

SLV WEEKLY

DBB WEEKLY

DBB WEEKLY

DBA WEEKLY

DBA WEEKLY

USO WEEKLY

USO WEEKLY

XLE WEEKLY

XLE WEEKLY

EFA WEEKLY

EFA WEEKLY

IEV WEEKLY

IEV WEEKLY

EEM WEEKLY

EEM WEEKLY

EPI WEEKLY

EPI WEEKLY

EPHE WEEKLY

EPHE WEEKLY

EWJ WEEKLY

EWJ WEEKLY

EWG WEEKLY

EWG WEEKLY

EWU WEEKLY

EWU WEEKLY

RSX WEEKLY

RSX WEEKLY

EWZ WEEKLY

EWZ WEEKLY

GXC WEEKLY

GXC WEEKLY

Friday is options expiration, and that might create some volatility.

Consumer Sentiment and Leading Indicators are also on tap.

By the way, for all you young folks, the image above is of the original "D'OH" guy (James Finlayson) from Laurel and Hardy days.

Let's see what happens.

Source: More Bad News Is Good News For Bulls