ETF Market Trends: Bank Downgrades Weigh on Markets

ETF Market Direction Summary: 10-26-2009

U.S. Equities: Stocks closed down for their 2nd consecutive trading session as they gave up their initial gains after the first 3 hours of trading. Many label a rising dollar as the culprit for Monday’s selloff, but other factors weighed in as well:

1. Investors are concerned that the $8,000 home buyer tax credit will be phased out for first time buyers. Economists and market bulls have somewhat painted themselves into a corner by declaring the end of the recession. If they still hold on to this argument, extending the tax credit becomes a tough sell to those in Congress.
2. Analyst Dick Bove took a shining to more financial stocks with his axe by downgrading Fifth Third Bancorp (FITB), Suntrust (STI), and US Bancorp (USB). He also projects Bank of America (BAC) needing to raise $45bn in order for it to pay off its TARP obligations.
3. The VIX, i.e. market volatility indicator, exploded +9.16% and hit a new 5 day high at $24.31, which allowed it to reverse its short-term downtrend.

On a more positive note for the retail industry, Radio Shack (RSH) posted sales well above consensus estimates in its quarterly report. The stock increased +15.90%.

In terms of market direction trends, the S&P 500 joined the IWM in the short-term downtrend status club. Major sectors and key industries that also incurred downgrades to their trends were XLY, XLK, XLE, XLU, XLV, OIH, and RKH. For anyone interested in support levels for the S&P 500 ETF (SPY), I have posted a brief technical analysis chart report.

International Equities: In the Americas, the ILF and EWZ were downgraded; Europe ETF downgrades occurred in EWG, RSX, IEV, VGK; Asia-Pacific downgrades were in EWM and VNM. Emerging Markets downgrades were in EEM, GMF, GUR, and GML.

Commodities: The dollar continues to negatively impact some commodity prices. The short-term trends for the JJG and CRBQ were downgraded.

Forex: Finally, the dollar (UUP) has broken out to a new short-term uptrend while taking down the FXE, FXF, FXA, FXM, FXY, and CEW. There appears to be no major fundamental catalyst for the dollar’s upside move. I would regard this as a technically oversold bounce and remain suspicious of its sustainability unless there is a major policy change from the Fed. Next week’s FOMC policy statement should give us more visibility.

Bonds: Rates continue to rise in the market despite the selling in equities. There are no significant changes to the trends for bond ETFs.

Real Estate: There are no significant changes to the trends for real estate ETFs. The weakest members of this group remain the ITB and XHB, both proxies for homebuilders. Given the uncertainty surrounding the extension of the home buyers tax credit, they are likely to remain in limbo. If the extension is not granted, then I would expect the bears to launch a more aggressive assault on these two funds.

ETF 5 Day New Highs: U.S. Equties (VXZ); International Equities (FXI*, GMF); Commodities (DBB*, DBC, JJC*, UGA*); Forex (BZF, UUP); Bonds (JNK*); Real Estate (ICF, IYR, REZ). (Note * denotes 250 day new high)

ETF 5 Day New Lows: U.S. Equities (DIA, SPY, QQQQ, IWM, IYZ, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, BBH, ITA, IYT, OIH, PPH, RKH, SEA, SMH); International Equities (EWC, EWW, ISI, EWG, EWQ, VGK, IEV, RSX, EWU, EWA, EWH, EWJ, EWS, EWM, IF, VNM, GAF, GUR, EEM, EWX); Commodities (CRBQ, GLD, SLV, UNG, USO); Forex (CEW, FXA, FXB, FXC, FXE, FXF, FXM, FXY, ICN, XRU); Bonds (AGG, IEF, MBB, SHY, TIP, TLT, WIP); Real Estate (ITB, REM). (Note * denotes 250 day new low)

Here’s to kicking off another trading week with Hillbent on the Market Direction and ETF Market Trends™…

Hillbent Market Direction Resources

Economic Calendar Events: Refer to U.S. Calendar or International Calendar

Postive & Negative Earnings Surprises: Refer to Hillbent’s earnings summary report for a detailed analysis of positive & negative earnings surprises

ETF Market Trends™ Monitor (10-26-2009)

U.S. Equity ETFs
Equity Indexes	Price	%Chg	PMI	ST	MT	LT
DIA (DJ Industrials)	98.81	-1.02%	13	up	up	up
SPY (S&P 500)	106.91	-1.08%	11	down	up	up
QQQQ (Nasdaq 100)	42.99	-0.32%	21	up	up	up
IWM (Russell 2000)	59.52	-0.90%	15	down	up	up
VXX (VIX Futures)	43.70	3.26%	88	down	down	down
Major Sectors	Price	%Chg	PMI	ST	MT	LT
XLY (Consumer Discrtn)	28.08	-0.60%	17	down	up	up
XLP (Consumer Staples)	25.87	-0.77%	9	down	up	up
XLE (Energy)	57.34	-1.65%	6	down	up	up
XLF (Financials)	14.71	-2.58%	16	down	up	up
XLV (Health Care)	28.40	-1.08%	10	down	down	up
XLI (Industrials)	26.47	-0.79%	14	down	up	up
XLB (Materials)	30.74	-2.57%	2	down	up	up
XLK (Technology)	21.19	-0.66%	11	down	up	up
IYZ (Telecom)	17.80	-1.55%	13	down	down	up
XLU (Utilities)	29.04	-1.33%	10	down	down	up
Key Industries	Price	%Chg	PMI	ST	MT	LT
ITA (Aerospace & Defense)	47.12	-1.27%	10	down	up	up
BBH (Biotech)	93.44	-1.54%	16	down	down	up
OIH (Oil Services)	124.18	-2.24%	10	down	up	up
PPH (Pharmaceuticals)	61.89	-0.93%	8	down	down	up
RKH (Regional Banks)	79.26	-3.47%	17	down	down	up
RTH (Retail)	92.61	0.11%	25	up	up	up
SMH (Semiconductors)	25.38	0.48%	40	down	up	up
SWH (Software)	40.48	-0.17%	9	up	up	up
SEA (Global Shipping)	13.25	-1.92%	10	down	up	up
IYT (Transportation)	67.79	-0.73%	11	down	down	up
International Equity ETFs
Americas	Price	%Chg	PMI	ST	MT	LT
ISI (S&P 1500)	48.04	-1.15%	9	down	up	up
EWC (MSCI Canada)	25.11	-2.83%	6	down	up	up
EWW (MSCI Mexico)	45.94	-2.30%	9	down	up	up
ILF (Latin America 40)	45.80	-1.61%	7	down	up	up
EWZ( MSCI Brazil)	73.66	-0.91%	32	down	up	up
Europe	Price	%Chg	PMI	ST	MT	LT
EWU (MSCI United Kingdom)	16.01	-0.37%	33	up	up	up
EWG (MSCI Germany)	22.40	-3.11%	13	down	up	up
EWQ (MSCI France)	25.88	-2.52%	12	down	up	up
RSX (Mkt Vectors Russia)	30.95	-1.12%	17	down	up	up
VGK (Vanguard Europe)	50.28	-2.01%	8	down	up	up
IEV (S&P Europe 350)	39.15	-1.61%	14	down	up	up
Asian-Pacific	Price	%Chg	PMI	ST	MT	LT
EWA (MSCI Australia)	23.81	-1.41%	14	down	up	up
FXI (FTSE China)	43.95	-0.92%	6	up	up	up
EWH (MSCI Hong Kong)	16.09	-0.68%	18	up	up	up
IFN (India Fund)	29.93	-0.93%	24	down	up	up
EWJ (MSCI Japan)	9.66	-0.31%	23	down	down	up
EWS (MSCI Singapore)	10.90	-0.27%	25	down	up	up
EWY (MSCI South Korea)	45.73	0.66%	12	down	up	up
EWT (MSCI Taiwan)	12.22	-0.08%	17	down	up	up
IF (Indonesia Fund)	9.90	-2.75%	15	down	up	up
EWM (MSCI Malaysia)	10.79	-0.92%	28	down	up	up
VNM (Vietnam)	30.67	-0.97%	8	down	n/a	n/a
Emerging Markets	Price	%Chg	PMI	ST	MT	LT
EEM (MSCI Emerging Mkts)	40.25	-1.25%	7	down	up	up
GMF (Emerging Asia Pacific)	71.55	-1.12%	10	down	up	up
GUR (Emerging Europe)	44.27	-1.69%	7	down	up	up
GML (Emerging Latin America)	76.05	-1.40%	16	down	up	up
GAF (Middle East & Africa)	60.43	-2.37%	26	down	up	up
EWX (Emerging Small Caps)	45.57	-0.87%	16	down	up	up
Alternative Assets
Commodities	Price	%Chg	PMI	ST	MT	LT
GLD (Gold)	101.86	-1.58%	5	down	up	up
SLV (Silver)	16.79	-3.51%	13	up	up	up
DBB (Base Metals)	20.35	0.10%	9	up	up	up
JJC (Copper)	41.18	-1.37%	3	up	up	up
USO (Oil)	40.13	-1.91%	15	up	up	up
UNG (Natural Gas)	10.75	-4.77%	0	down	down	down
UGA (Gasoline)	37.24	-0.72%	14	up	up	up
CRBQ (Global Commodities)	40.89	-2.06%	13	down	n/a	n/a
DBC (Commodities)	24.26	-1.82%	16	up	up	up
JJG (Grains)	39.20	-3.69%	1	down	up	up
DBA (Agriculture)	26.13	-1.54%	3	up	up	up
Forex	Price	%Chg	PMI	ST	MT	LT
UUP (U.S. Dollar)	22.58	0.67%	88	up	down	down
FXE (Euro)	148.48	-0.89%	9	down	up	up
FXY (Japanese Yen)	107.70	-0.17%	15	down	down	up
FXF (Swiss Franc)	97.81	-0.92%	12	down	up	up
FXB (British Pound)	162.85	0.10%	28	up	down	up
FXC (Canadian Dollar)	93.53	-1.36%	19	down	up	up
FXA (Australian Dollar)	91.65	-0.79%	17	down	up	up
FXM (Mexican Peso)	75.58	-1.34%	6	down	down	up
BZF (Brazilian Real)	26.68	-0.97%	22	up	up	up
CYB (Chinese Yuan)	25.30	-0.16%	0	lateral	lateral	lateral
ICN (Indian Rupee)	24.83	-0.88%	0	down	up	up
XRU (Russian Ruble)	34.50	-0.92%	0	up	up	n/a
CEW (Emerging Currency)	21.91	-0.81%	3	down	up	up
Bonds	Price	%Chg	PMI	ST	MT	LT
SHY (1-3 Yr Tsy)	83.70	-0.11%	0	down	down	down
IEF (7-10 Yr Tsy)	90.69	-0.57%	13	down	down	down
TLT (20 Yr+ Tsy)	93.72	-1.30%	18	down	down	down
TIP (Tsy Inflation Protect)	102.72	-0.46%	32	down	up	up
AGG (Investment Grade)	104.06	-0.27%	7	down	up	up
MBB (Mortgage Bonds)	106.66	-0.16%	32	down	up	up
JNK (Hi Yld Bonds)	38.54	-0.31%	0	up	up	up
HYG (Hi Yld Corp)	86.90	0.06%	67	up	up	up
WIP (Int’l Inflation Protect)	56.95	-0.44%	37	down	up	up
EMB (Emerging Markets Bonds)	102.75	-0.47%	13	down	up	up
MUB (Nat’l Muni Bond)	103.15	-0.12%	51	up	up	up
Real Estate	Price	%Chg	PMI	ST	MT	LT
IYR (DJ US Real Estate)	42.00	-0.62%	7	down	up	up
ICF (Cohen & Steers)	47.83	-0.35%	7	down	up	up
XHB (Homebuilders)	14.80	-1.53%	18	down	down	up
ITB (Home Construction)	11.92	-2.38%	7	down	down	up
FIO (Industrial Office)	21.89	0.18%	14	up	up	up
REM (Mortgage Reits)	14.52	-1.22%	3	down	down	up
REZ (Residential Index)	28.10	0.24%	3	down	up	up
RTL (Retail Index)	20.33	0.05%	48	up	up	up

*PMI measures strength of % daily trading range on scale of 0 to 100

**ST = Short-Term Trend; MT = Intermediate Trend; LT = Long-Term or Primary Trend

***Vol% measures % change in daily volume vs. average daily volume

Market Momentum Summary: 10-26-2009

Market Momentum	20-Day MA	50-Day MA	200-Day MA
Today	39.23%	61.60%	88.55%
Yesterday	50.60%	67.87%	89.68%
Last Week	70.26%	78.69%	91.96%
Last Month	78.06%	83.01%	92.26%

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.