ETF Market Trends: Greed Trumps Fear in M&A Wall Street Action

ETF Market Direction Summary: 11-03-2009

Bulls took advantage of dollar weakness and bought stocks in earnest to support the S&P 500 in its 2nd consecutive day of positive performance. Initially, stocks traded lower as the U.S. dollar continued to advance, but a surge in precious metals buying sent spot gold prices to a new 52 week high and forced the greenback to retreat and settle for a small positive close in the lower end of its daily trading range. A $6.7bn purchase of 200 tonnes of gold from the IMF by India’s Reserve Bank was responsible for this explosive move.

Signs of economic confidence were evident, both domestically and internationally. Mergers & acquisition deals in the U.S. were announced and lifted the outlook of investors. Internationally, Australia’s central bank raised rates again by another 25 bps to confirm the continuation of the global economic recovery.

Bullish events for Tuesday’s trading session:

1. Warren Buffett displayed greed in the midst of market fear by having Berkshire Hathaway (BRK.A) acquire Burlington Sante Fe Railroad (BNI) at $100 per share.
   
2. In the shadow of Mr. Buffett’s acquisition announcement was other buyout news of Stanley Works (SWK) taking over Black & Decker (BDK).
   
3. October Motor Vehicle Sales for domestic vehicles came in at a better than expected annualized rate at 7.9mm vs. 7.3mm consensus. Most impressive about the report is that consumers stepped up without cash-for-clunkers incentives.
   
4. September Factory Orders rebounded to 0.9% from -0.8% last August.
   
5. Positive earnings surprises from S&P 500 companies: THC, ADM, RL, VIA.B, FTR, EMR, CTSH, CAM, COL, and MHS.
   

Bearish events for Tuesday’s trading session:

1. Morgan Stanley downgraded Intel (INTC) and other semiconductor stocks to cautious on its view that the group is in the final innings of the semi cycle.
   
2. Although MasterCard (MA) beat earnings estimates by more than 18%, it guided long-term revenue growth below targets due to weak macro conditions.
   

Market momentum has now reversed to positive territory for all three time frames. Yet, caution is in order as the near-term trend remains down and the correction continues. Preservation of principal, especially after a 60% + run-up from the March 2009 lows, is the number one priority.

Wednesday’s FOMC meeting and the employment report later this week should give us a green or red light signal to better determine the market direction.

Please refer to the trend tables below for any changes and keep Hillbent for the Market Direction and ETF Market Trends™…

ETF New 5 Day Highs & Lows

ETF 5 Day New Highs: U.S. Equities (VXZ, IYT); International Equities (); Commodities (SLV, GLD*, DBA, DBC, JJG); Forex (ICN, UUP); Bonds (BWX). (Note * denotes 250 day new high)

ETF 5 Day New Lows: U.S. Equities (XLE, XLV, XLP, XLK, SMH, PPH, RTH, OIH); International Equities (EWW, IEV, VGK, EWU, EWG, EWQ, VNM, IFN, EWA, EWH, EWY, GUR,GML, GAF); Commodities (JJC, UNG, DBB); Forex (FXM, FXB, FXE, FXF, FXA); Bonds (BWX, MUB, WIP, MBB, SHY, HYG, AGG, IEF). (Note * denotes 250 day new low)

ETF Market Trends™ Monitor (11-03-2009)

U.S. Equity ETFs
Equity Indexes	Price	%Chg	Vol%	PMI	ST	MT	LT
DIA (DJ Industrials)	97.76	-0.09%	16.72%	80	down	up	up
SPY (S&P 500)	104.65	0.32%	15.27%	88	down	down	up
QQQQ (Nasdaq 100)	41.26	0.32%	-9.91%	88	down	down	up
IWM (Russell 2000)	56.97	1.33%	53.44%	91	down	down	up
VXX (VIX Futures)	48.76	0.10%	68.46%	43	up	down	down
Major Sectors	Price	%Chg	Vol%	PMI	ST	MT	LT
XLY (Consumer Discrtn)	27.10	0.07%	64.00%	78	down	up	up
XLP (Consumer Staples)	25.90	-0.69%	202.54%	40	down	up	up
XLE (Energy)	56.36	1.37%	-7.69%	84	down	up	up
XLF (Financials)	14.21	0.27%	4.09%	83	down	down	up
XLV (Health Care)	28.20	0.04%	-16.15%	71	down	down	up
XLI (Industrials)	26.02	1.72%	51.66%	100	down	up	up
XLB (Materials)	29.92	1.08%	22.04%	90	down	down	up
XLK (Technology)	20.65	-0.39%	73.81%	100	down	up	up
IYZ (Telecom)	17.41	0.64%	-43.86%	100	down	down	up
XLU (Utilities)	28.26	-0.28%	18.25%	32	down	down	up
Key Industries	Price	%Chg	Vol%	PMI	ST	MT	LT
ITA (Aerospace & Defense)	45.42	-0.08%	986.82%	93	down	down	up
BBH (Biotech)	91.66	1.53%	-6.25%	84	down	down	down
OIH (Oil Services)	120.85	2.55%	15.98%	87	down	up	up
PPH (Pharmaceuticals)	61.05	-0.52%	-31.46%	26	down	down	up
RKH (Regional Banks)	76.76	-0.34%	-0.35%	65	down	down	up
RTH (Retail)	90.39	-0.47%	20.69%	47	down	up	up
SMH (Semiconductors)	23.89	-1.16%	26.64%	88	down	down	up
SWH (Software)	38.77	0.73%	-90.60%	100	down	up	up
SEA (Global Shipping)	12.42	0.81%	-7.49%	100	down	down	up
IYT (Transportation)	67.70	5.35%	190.35%	89	down	down	up
International Equity ETFs
Americas	Price	%Chg	Vol%	PMI	ST	MT	LT
ISI (S&P 1500)	46.91	0.24%	8.42%	88	down	down	up
EWC (MSCI Canada)	24.45	2.09%	8.86%	96	down	down	up
EWW (MSCI Mexico)	43.96	-0.27%	13.63%	72	down	down	up
ILF (Latin America 40)	44.37	1.84%	14.70%	84	down	up	up
EWZ( MSCI Brazil)	71.01	2.04%	15.96%	83	down	up	up
Europe	Price	%Chg	Vol%	PMI	ST	MT	LT
EWU (MSCI United Kingdom)	15.77	0.83%	66.92%	100	down	up	up
EWG (MSCI Germany)	21.04	-0.61%	-39.58%	84	down	down	up
EWQ (MSCI France)	24.68	-0.60%	-38.80%	90	down	down	up
RSX (Mkt Vectors Russia)	28.27	-1.64%	44.21%	95	down	up	up
VGK (Vanguard Europe)	48.59	-0.61%	80.00%	81	down	down	up
IEV (S&P Europe 350)	37.65	-0.76%	139.82%	84	down	down	up
Asian-Pacific	Price	%Chg	Vol%	PMI	ST	MT	LT
EWA (MSCI Australia)	22.12	-0.72%	40.12%	95	down	up	up
FXI (FTSE China)	42.55	-0.44%	0.60%	87	down	up	up
EWH (MSCI Hong Kong)	15.58	-0.13%	-26.25%	75	down	up	up
IFN (India Fund)	27.59	-2.13%	38.65%	90	down	down	up
EWJ (MSCI Japan)	9.63	-0.10%	-10.24%	100	down	down	up
EWS (MSCI Singapore)	10.64	0.09%	-37.20%	93	down	up	up
EWY (MSCI South Korea)	42.96	-0.39%	57.23%	85	down	down	up
EWT (MSCI Taiwan)	11.68	-0.76%	15.85%	77	down	down	up
IF (Indonesia Fund)	9.38	-0.69%	-5.55%	75	down	down	up
EWM (MSCI Malaysia)	10.67	0.28%	151.15%	94	down	up	up
VNM (Vietnam)	27.51	-2.48%	-5.71%	89	down	n/a	n/a
Emerging Markets	Price	%Chg	Vol%	PMI	ST	MT	LT
EEM (MSCI Emerging Mkts)	38.19	0.16%	-12.49%	86	down	up	up
GMF (Emerging Asia Pacific)	67.48	-1.03%	30.46%	62	down	down	up
GUR (Emerging Europe)	40.26	-1.30%	7.18%	95	down	up	up
GML (Emerging Latin America)	72.74	1.28%	28.60%	87	down	up	up
GAF (Middle East & Africa)	57.28	0.24%	222.79%	87	down	down	up
EWX (Emerging Small Caps)	43.60	-0.17%	-69.04%	83	down	up	up
Alternative Assets
Commodities	Price	%Chg	Vol%	PMI	ST	MT	LT
GLD (Gold)	106.46	2.41%	116.85%	92	up	up	up
SLV (Silver)	16.98	5.07%	123.49%	94	up	up	up
DBB (Base Metals)	19.82	-0.05%	1.00%	96	down	up	up
JJC (Copper)	40.98	0.56%	4.80%	85	up	up	up
USO (Oil)	40.62	1.63%	-16.01%	90	down	up	up
UNG (Natural Gas)	10.07	1.10%	-39.77%	80	down	down	down
UGA (Gasoline)	36.58	0.47%	22.68%	80	down	up	up
CRBQ (Global Commodities)	39.59	0.92%	-61.46%	86	down	n/a	n/a
DBC (Commodities)	24.32	1.33%	23.84%	89	up	up	up
JJG (Grains)	39.95	1.65%	32.43%	81	up	up	up
DBA (Agriculture)	26.35	0.96%	-5.47%	71	up	up	up
Forex	Price	%Chg	Vol%	PMI	ST	MT	LT
UUP (U.S. Dollar)	22.68	0.27%	81.43%	24	up	down	down
FXE (Euro)	146.91	-0.41%	24.49%	74	down	up	up
FXY (Japanese Yen)	109.92	0.00%	-62.47%	59	up	up	up
FXF (Swiss Franc)	96.59	-0.88%	-17.88%	23	down	up	up
FXB (British Pound)	163.74	0.16%	-15.23%	80	down	up	up
FXC (Canadian Dollar)	93.37	0.93%	101.74%	83	down	up	up
FXA (Australian Dollar)	90.28	-0.12%	46.75%	87	down	up	up
FXM (Mexican Peso)	75.13	-0.78%	-33.60%	9	down	down	up
BZF (Brazilian Real)	26.55	1.49%	-17.63%	74	down	up	up
CYB (Chinese Yuan)	25.29	-0.04%	-24.75%	80	lateral	lateral	lateral
ICN (Indian Rupee)	24.97	0.00%	161.72%	32	down	up	up
XRU (Russian Ruble)	34.18	0.00%	-100.00%	n/a	down	up	n/a
CEW (Emerging Currency)	21.72	0.09%	-8.14%	88	down	up	up
Bonds	Price	%Chg	Vol%	PMI	ST	MT	LT
SHY (1-3 Yr Tsy)	83.83	-0.01%	-15.86%	38	down	down	down
IEF (7-10 Yr Tsy)	90.77	-0.23%	-39.77%	27	down	down	down
TLT (20 Yr+ Tsy)	94.10	-1.00%	11.63%	7	down	down	down
TIP (Tsy Inflation Protect)	103.66	-0.20%	-11.24%	40	down	up	up
AGG (Investment Grade)	104.27	-0.05%	21.58%	29	down	up	up
MBB (Mortgage Bonds)	106.75	-0.07%	134.22%	50	down	up	up
JNK (Hi Yld Bonds)	37.72	-0.08%	-39.48%	70	down	up	up
HYG (Hi Yld Corp)	85.33	0.22%	41.04%	75	down	up	up
BWX (Int’l Tsy Bonds)	58.40	-0.14%	90.12%	85	down	up	up
WIP (Int’l Inflation Protect)	56.51	-0.22%	-23.90%	90	down	up	up
EMB (Emerging Markets Bonds)	100.69	-0.37%	-8.43%	53	down	down	up
MUB (Nat’l Muni Bond)	102.10	-0.27%	-21.48%	0	down	down	up
Real Estate	Price	%Chg	Vol%	PMI	ST	MT	LT
IYR (DJ US Real Estate)	41.20	1.45%	5.58%	94	down	down	up
ICF (Cohen & Steers)	47.03	1.29%	30.32%	91	down	up	up
XHB (Homebuilders)	14.10	1.93%	28.89%	91	down	down	up
ITB (Home Construction)	11.30	2.19%	-0.37%	93	down	down	up
FIO (Industrial Office)	20.97	3.56%	56.43%	100	down	down	up
REM (Mortgage Reits)	14.11	-0.21%	-6.65%	26	down	down	up
REZ (Residential Index)	27.89	1.12%	-95.48%	100	down	up	up
RTL (Retail Index)	19.61	4.55%	-86.53%	100	down	down	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 (% Stocks > Moving Avg): 11-03-2009

Market Momentum	20-Day MA	50-Day MA	200-Day MA
Today	19.48%	35.72%	84.70%
Yesterday	15.93%	32.56%	84.09%
Last Week	33.07%	56.92%	88.03%
Last Month	58.44%	75.91%	90.80%

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

Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

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Comments

[robert.b.fe...:]

Nearly all of the short term indicators are down as well as most of the mid-term indicators. I guess long term trend lines would have to be up since you can only stay on the downward trend for so long before bottoming out or ceasing to exist at all.

Nov 04 08:52 AM

[Albertarocks:]

I think we're going to see something over the coming months that we haven't seen in a long, long while. I can see a whole lot of reasons why the dollar and the price of precious metals are very possibly going to be marching in the same direction over the next half year or so..... higher.

Nov 04 08:59 AM

[robert.b.fe...:]

I agree Rocks. We may see as much as a 15% uptick in both before rates go up and the dollar goes south again.

Nov 04 09:38 AM

[Assata Sher...:]

New to the game. Need suggestions on best way for start up investing for grandchildren. So much out there ... need to start somewhere.

Suggestions please.

Nov 04 10:34 AM

[Gary A:]

Well Assata, the Fed has two scams at its fingertips. It can drive prices of stocks up with the carry trade. And it can drive them down when bond purchases are weak. Fun huh? It is a casino and a dangerous place to play. hubpages.com/hub/Proof...

Nov 04 11:35 AM

[robert.b.fe...:]

What are your objectives? If you are aiming for a college education 529 plans are a fairly good bet with tax advantages. Some states will even lock in tuition when you initiate a plan.


On Nov 04 10:34 AM Assata Sherrill wrote:

> New to the game. Need suggestions on best way for start up investing
> for grandchildren. So much out there ... need to start somewhere.
>
>
> Suggestions please.

Nov 04 05:03 PM

[ChNev:]

Check out Sharebuilder.com website. It has an excellent on-line questionnaire which walks you through your goals and comfort levels of risk, resulting in a recommended portfolio, based upon your hopefully honest answers. Good luck. ChNev..

Nov 04 09:30 PM