ETF Trends: 9-11 Lends Pause to Market Activity

Friday finally saw the market take a much needed and well deserved rest from its 5 day winning streak. Even though stocks finished down for the day, their overall weekly performance was still positive. Overall, it was a subdued trading session and the anniversary of the 911 terrorist attacks were as good a day as any for the market to take a pause.

(Incidentally, this week preceded the anniversary of another type of terrorist attack, i.e. the collapse of Lehman and onslaught of the financial crisis brought on by Wall Street’s lying and conniving capitalists. They have in effect compromised our national security with "too big to fail" bailouts amounting to obscene levels of national debt and unrealistic tax burdens to be imposed upon our progeny. As an ex-Morgan Stanley (MS) employee, but also someone who had family subjected to the Pentagon attack and family members serving in either the capacity of intelligence or direct combat in both the Afghanistan and Iraqi conflicts that ensued, I do not trivialize or minimize the gravity of the attacks on America nor the impact that it had on so many people, especially those in the financial services industry. However, in an effort to put things into perspective, I believe that posterity will judge that the greatest blow to our country’s future stability was delivered by dishonest traitorous banksters.)

Now that I got the above off my chest, worthy of mention is the halt in market momentum for stocks trading above key moving averages and declining positive market breadth in 5 day new highs vs. 5 day new lows for both the Russell 3000 and Hillbent’s 209 industry groups. In and of itself, this does not mean anything, but does deserve the attention of a watchful eye since these indicators can often be a precursor to change in the market’s direction.

Bullish Events:

1) U of M’s Consumer Sentiment Index rose to 70.2 in September and was above consensus estimate at 67.0 and previous month at 65.7.

2) Fedex (FDX) issued positive forecasts for its business and industry going forward, which also corroborates with an analyst’s prior upgrade of UPS.

Bearish Events:

1) Import and Export Prices in August reflected signs of inflation beginning to take root as a result of a weaker dollar. Rising prices were most felt in petroleum products, but are beginning to bubble in commodities such as base metals.

2) Wholesale Inventories dropped -1.4% and give evidence that businesses are still playing it on the safe side. While such a strategy helps to keep costs down, inventories eventually will become insufficient to meet demand and need restocking. (The time for such has yet to arrive, but when it does, I envision the net result of such an outcome to be a cyclical boost to employment and GDP, which many might mistake for a stronger sustainable economic force than it actually is.)

3) Treasury Budget at -111.4bn was better than anticipated estimates of -$140bn. (Juxtaposed to the big picture, which shows a deficit close to $1.4 trillion, this hardly was enough to thwart dollar bears.)

ETF Trends: There are no significant changes to the trend tables or comments related to this section.

Closing Thoughts:

Overall, it was an impressive week in terms of performance. The +3.94% gains delivered by the S&P 500 over the Labor Day shortened week are some of the best seen since mid-July 2009. Volume was still disappointingly weak. I think it will be interesting to see how the program trading holds up against the A-Team (i.e. return of money managers in full force and volume).

The market gods have been very generous as of late, but sooner or later they will require a sacrifice. In other words, be careful.

Week Ahead:

The upcoming week should unveil more insight on consumer spending habits: 1) retail sales economic indicator report on Tuesday; and 2) earnings results from Discover Financial Services (DFS) and Best Buy (BBY) on Thursday.

Tech bellwethers Oracle (ORCL) and Hewlett Packard (HPQ) report earnings respectively, on Tuesday and Wednesday.

Other market moving events related to economics are Wednesday’s CPI, Industrial Production and Housing Market Index reports; and Thursday’s Jobless Claims and Housing Starts reports.

The frosting on the cake will be Friday’s quadruple witching. This combined with all of the above should be enough ammunition for bulls and bears to continue waging their battles.

As always, stay Hillbent for The Market Direction…

(For a detailed analysis of today’s positive & negative earnings surprises, please refer to Hillbent’s earnings summary reports.)

Key Pivot Areas for Support & Resistance Levels (on 09-14-2009)

ETF Index	S3	S2	S1	Pivot	R1	R2	R3
DIA	94.69	95.46	95.84	96.23	96.61	97.00	97.77
SPY	102.74	103.76	104.27	104.78	105.29	105.80	106.82
QQQQ	40.65	41.05	41.29	41.45	41.69	41.85	42.25
IWM	57.72	58.61	59.02	59.50	59.91	60.39	61.28
VXX	48.50	50.42	51.61	52.34	53.53	54.26	56.18

ETF Trend Monitor (09-11-2009)

U.S. Equity ETFs
Equity Indexes	Short-term	Intermediate	Primary
DIA (DJ Industrials)	up	up	up
SPY (S&P 500)	up	up	up
QQQQ (Nasdaq 100)	up	up	up
IWM (Russell 2000)	up	up	up
VXX (S&P 500 VIX Futures)	down	down	down
Major Sectors	Short-term	Intermediate	Primary
XLY (Consumer Discrtn)	up	up	up
XLP (Consumer Staples)	up	up	up
XLE (Energy)	up	up	up
XLF (Financials)	up	up	up
XLV (Health Care)	up	up	up
XLI (Industrials)	up	up	up
XLB (Materials)	up	up	up
XLK (Technology)	up	up	up
IYZ (Telecom)	up	up	up
XLU (Utilities)	up	up	down
Key Industries	Short-term	Intermediate	Primary
ITA (Aerospace & Defense)	up	up	up
BBH (Biotech)	lateral	up	up
OIH (Oil Services)	up	up	up
PPH (Pharmaceuticals)	up	up	up
RKH (Regional Banks)	up	up	up
RTH (Retail)	up	up	up
SMH (Semiconductors)	up	up	up
SWH (Software)	up	up	up
SEA (Global Shipping)	up	up	lateral
IYT (Transportation)	up	up	up
International Equity ETFs
Americas	Short-term	Intermediate	Primary
ISI (S&P 1500)	up	up	up
EWC (MSCI Canada)	up	up	up
EWW (MSCI Mexico)	up	up	up
ILF (Latin America 40)	up	up	up
EWZ( MSCI Brazil)	up	up	up
Europe	Short-term	Intermediate	Primary
EWU (MSCI United Kingdom)	up	up	up
EWG (MSCI Germany)	up	up	up
EWQ (MSCI France)	up	up	up
RSX (Mkt Vectors Russia)	up	up	up
VGK (Vanguard Europe)	up	up	up
IEV (S&P Europe 350)	up	up	up
Asian-Pacific	Short-term	Intermediate	Primary
EWA (MSCI Australia)	up	up	up
FXI (FTSE China)	up	up	up
EWH (MSCI Hong Kong)	up	up	up
IFN (India Fund)	up	up	up
EWJ (MSCI Japan)	up	up	up
EWS (MSCI Singapore)	up	up	up
EWY (MSCI South Korea)	up	up	up
EWT (MSCI Taiwan)	up	up	up
VNM (Vietnam)	up	n/a	n/a
Emerging Markets	Short-term	Intermediate	Primary
EEM (MSCI Emerging Mkts)	up	up	up
GMF (Emerging Asia Pacific)	up	up	up
GUR (Emerging Europe)	up	up	up
GML (Emerging Latin America)	up	up	up
GAF (Middle East & Africa)	up	up	up
EWX (Emerging Small Caps)	up	up	up
Alternative Assets
Commodities	Short-term	Intermediate	Primary
GLD (Gold)	up	up	up
SLV (Silver)	up	up	up
DBB (Base Metals)	down	up	up
JJC (Copper)	down	up	up
USO (Oil)	down	lateral	lateral
UNG (Natural Gas)	lateral	down	down
UGA (Gasoline)	down	down	up
DBC (Commodities)	down	down	lateral
DBA (Agriculture)	down	down	down
Forex	Short-term	Intermediate	Primary
UUP (U.S. Dollar)	down	down	down
FXE (Euro)	up	up	up
FXY (Japanese Yen)	up	up	up
FXF (Swiss Franc)	up	up	up
FXB (British Pound)	up	up	up
FXC (Canadian Dollar)	up	up	up
FXA (Australian Dollar)	up	up	up
FXM (Mexican Peso)	lateral	down	lateral
BZF (Brazilian Real)	up	up	up
CYB (Chinese Yuan)	lateral	lateral	lateral
ICN (Indian Rupee)	lateral	lateral	lateral
XRU (Russian Ruble)	up	lateral	n/a
CEW (Emerging Currency)	up	up	n/a
Bonds	Short-term	Intermediate	Primary
SHY (1-3 Yr Tsy)	lateral	lateral	lateral
IEF (7-10 Yr Tsy)	up	up	up
TLT (20 Yr+ Tsy)	up	up	lateral
TIP (Tsy Inflation Protect)	up	up	up
AGG (Investment Grade)	lateral	up	up
JNK (Hi Yld Bonds)	up	up	up
HYG (Hi Yld Corp)	up	up	up
WIP (Int’l Inflation Protect)	up	up	up
EMB (Emerging Markets Bonds)	up	up	up
MUB (Nat’l Muni Bond)	up	up	up
Real Estate	Short-term	Intermediate	Primary
IYR (DJ US Real Estate)	up	up	up
ICF (Cohen & Steers)	up	up	up
XHB (Homebuilders)	up	up	up
ITB (Home Construction)	up	up	up
FIO (Industrial Office)	up	up	up
REM (Mortgage Reits)	up	up	up
REZ (Residential Index)	up	up	up
RTL (Retail Index)	up	up	up

Market Momentum and Market Diary (09-10-2009)

Market Momentum	20-Day MA	50-Day MA	200-Day MA
Today	77.66%	83.28%	90.57%
Yesterday	78.65%	84.30%	90.69%
Last Week	42.72%	73.37%	87.77%
Last Month	77.28%	85.45%	89.41%
Hillbent	Stocks		Industries
Market Diary	(Russell 3000)		(209)
Oversold (bullish)	21.31%		1.91%
Overbought (bearish)	21.28%		22.97%
5 Day New Highs	52		5
5 Day New Lows	26		0
52 Week New Highs	247		38
52 Week New Lows	7		0
Price Up & Volume Up	21.28%		25.36%
Price Up & Volume Down	18.99%		21.05%
Price Down & Volume Up	21.75%		26.32%
Price Down & Volume Down	35.70%		27.27%

Disclosures: Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

Comments

[John Mylant]

Yes we are bullish but I am worried what is driving this bullish movement the whole why. I guess we just ride it while we can and then brace for the turn around when it comes. mylantsmoneyblog.typep...

2009 Sep 14 08:05 AM

[Emerald]

We are still in a deflationary environment as savings increase and we work off debt over time. Expect a slow recovery. Equities are a little pricey. Intermediate bonds are a good bet for the next six months to one year for yield and safety. Note: Long BND, AGG and 65% fixed income.

2009 Sep 14 09:48 AM

[brucearnold]

On 9/11/01, the all-powerful bankers behind New World Order globalization unleashed their oil and money hungry military-industrial dogs of war to orchestrate the fall of 3 (not 2) WTC towers--the third, not struck by a plane, housing 3 floors of damning SEC records. On that day, we lost 3000 lives (with 1000s more to follow) plus 4 commercial airliners (with all on board) ... and stood by helplessly as something (not wide enough to be a 757) bored a hole in the side of the Pentagon. Yet even today, two elections and a new administration later, our Big Brother government expects us to believe that all of that masterfully-plotted and perfectly-timed destruction was accomplished by 15 Saudis and 4 of their cousins using nothing more than box cutters and big balls. If you believe that, or if you believe we have been told anything close to the Truth about 9/11, then I ask you to Google "911 truth" and "911 peak oil", and objectively evaluate what you find at websites like AE911Truth.org.

2009 Sep 27 09:33 PM