ETF Market Trends: Technical Strength of Rally Expands to S&P 500 and Nasdaq 100

ETF Market Direction Summary: 11-11-2009

On Wednesday, the "new 52 week high club" was no longer an exclusive category for the Dow Industrials as the S&P 500 and Nasdaq 100 indices both made new 13 month highs. This expanding participation in new highs is in order if bulls are to sustain their momentum. Prior to this development, one of my concerns has been the asymmetrical character of this rally whereby a disproportionate share of technical leadership was emanating from the Dow, the most narrow of major equity indices representing the U.S. economy.

The lack of volume accompanying these upside moves is another concern. Normally, one could blame today’s lack of volume on the Veteran’s day holiday, but this has been a recurring problem. Some of this volume weakness in stocks may be explained by a preference for commodities and aversion to the U.S. dollar. (Unfortunately, I do not have the time or space to post charts in this report, but for any Doubting Thomases, I encourage you to look at the monthly and quarterly charts and confirm this for yourself.)

After conducting my own informal monthly and quarterly price volume analyses of the DIA, SPY, and QQQQ vs. the GLD, SLV, DBB, and DBC, it is evident that investors favor these assets. I realize that the aggregate volume of these alternative assets represent only a fraction of the combined volume of the DIA, SPY, and QQQQ, but the volume surges on rising prices for these commodity correlated ETFs serve the useful purpose as windsock indicators for investor sentiment. In addition to this, the UUP has also exhibited signs of heavy selling on surging volume, but I should warn that higher volume and selling of the UUP may be starting to show signs of peaking.

On the other side of the coin is the Federal Reserve which continues to reassure the market that it has no intentions of raising rates in the midst of a jobless recovery until it believes the economy is strong enough to stand on its own. This reluctance to raise rates and mop up excess liquidity along with the absence of a viable plan to reduce the national debt will continue to pressure the dollar.

As a result, this facilitates a dysfunctional relationship between stocks and their underlying currency and violates the rules of nature from a long-term perspective in regards to capital markets. However, it is likely to continue until enough market participants begin to question why a reserve currency should be used to finance carry trades.

In the new normal, this is logically bullish for U.S. based multi-nationals deriving high percentages of revenue from exports (and also helps to explain why the Russell 2000 has lagged the market in terms of retracing its losses during the current rally.) Perversely, dollar weakness remains a bullish catalyst for stocks, regardless of where they sell their products and services.

For further analysis, please refer to the trend tables below and remember to stay Hillbent for updates on the Market Direction and ETF Market Trends™…

ETF New 5 Day Highs & Lows

ETF 5 Day New Highs: U.S. Equities (DIA*, SPY*, QQQQ*, IWM, IYZ, XLB, XLE, XLF, XLI*, XLK*, XLP*, XLU, XLV*, XLY*, BBH, IAI, IAK, IGN, IHI, ITA, IYT, KIE, OIH, RKH, RTH*, SEA, SMH, SWH); International Equities (EWC, EWW, ILF*, ISI*, EWG, EWQ, EWU, IEV, RSX, VGK, EWA, EWS*, EWT, EWY, FXI*, IFN, EEM*, EWX, GAF, GMF, GML*, GUR); Commodities (CRBQ, GLD*, JJC, JJG, SLV); Forex (CEW, CYB, FXA, FXC, FXE, FXF, FXM, ICN); Bonds (AGG, BWX*, EMB, HYG, IEF, JNK, MBB, SHY, TIP*, TLT, WIP*); Real Estate (FIO, ICF, ITB, IYR, REM, REZ, XHB). (Note * denotes 250 day new high)

ETF 5 Day New Lows: U.S. Equities (VXX); International Equities (VNM); Commodities (DBA, SLV, UNG); Forex (FXB); Bonds (MUB). (Note * denotes 250 day new low)

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

U.S. Equity ETFs
Equity Indexes	Price	%Chg	Vol%	PMI	ST	MT	LT
DIA (DJ Industrials)	103.13	0.43%	-15.23%	50	up	up	up
SPY (S&P 500)	110.15	0.51%	-16.98%	44	up	up	up
QQQQ (Nasdaq 100)	43.90	0.64%	-21.13%	55	up	up	up
IWM (Russell 2000)	59.26	0.70%	-15.62%	44	up	down	up
VXX (VIX Futures)	42.39	-0.19%	-14.80%	69	down	down	down
Major Sectors	Price	%Chg	Vol%	PMI	ST	MT	LT
IYZ (Telecom)	18.13	0.22%	2.89%	61	up	down	up
XLB (Materials)	32.05	1.01%	16.34%	29	up	up	up
XLE (Energy)	58.21	0.00%	-18.64%	30	up	up	up
XLF (Financials)	14.97	1.35%	-6.30%	38	up	up	up
XLI (Industrials)	27.61	0.77%	-30.04%	44	up	up	up
XLK (Technology)	21.85	0.55%	-43.79%	65	up	up	up
XLP (Consumer Staples)	26.69	0.26%	4.33%	63	up	up	up
XLU (Utilities)	29.51	-0.24%	-22.43%	25	up	up	up
XLV (Health Care)	29.89	0.13%	-18.79%	62	up	up	up
XLY (Consumer Discrtn)	28.86	0.17%	26.19%	43	up	up	up
Key Industries	Price	%Chg	Vol%	PMI	ST	MT	LT
BBH (Biotech)	96.95	1.04%	-52.15%	95	up	down	up
IAI (Broker-Dealers)	28.93	1.15%	-41.13%	35	up	up	up
IAK (Insurance)	26.93	1.28%	-64.94%	65	up	up	up
IGN (GSTI Networking)	26.67	1.25%	-81.34%	78	up	up	up
IHI (Medical Devices)	50.50	0.26%	-64.66%	27	up	up	up
ITA (Aerospace & Defense)	48.22	0.52%	-66.01%	25	up	up	up
IYT (Transportation)	71.50	1.97%	25.89%	92	up	up	up
KIE (Insurance)	35.32	1.35%	-31.36%	32	up	up	up
OIH (Oil Services)	125.30	0.92%	-32.95%	45	up	up	up
PPH (Pharmaceuticals)	62.67	-0.22%	-64.85%	44	up	down	up
RKH (Regional Banks)	80.01	1.23%	0.93%	33	up	up	up
RTH (Retail)	94.20	0.05%	-7.48%	43	up	up	up
SEA (Global Shipping)	13.22	2.64%	67.72%	85	up	up	up
SMH (Semiconductor)	25.79	1.22%	26.53%	36	up	up	up
SWH (Software)	40.38	-0.17%	-38.72%	27	up	up	up
International Equity ETFs
Americas	Price	%Chg	Vol%	PMI	ST	MT	LT
EWC (MSCI Canada)	26.00	0.39%	6.47%	7	up	up	up
EWW (MSCI Mexico)	47.45	1.22%	1.42%	34	up	up	up
EWZ( MSCI Brazil)	76.04	-0.85%	-33.01%	30	up	up	up
ILF (Latin America 40)	47.63	-0.27%	8.82%	31	up	up	up
ISI (S&P 1500)	49.35	0.51%	-37.98%	33	up	up	up
Europe	Price	%Chg	Vol%	PMI	ST	MT	LT
EWG (MSCI Germany)	22.60	1.12%	106.30%	54	up	up	up
EWQ (MSCI France)	26.46	0.11%	-57.42%	19	up	up	up
EWU (United Kingdom)	16.54	-0.48%	12.40%	52	up	up	up
IEV (S&P Europe 350)	40.05	0.15%	-7.56%	36	up	up	up
RSX (Russia)	31.00	-0.58%	-44.80%	45	up	up	up
VGK (Vanguard Europe)	51.58	-0.12%	-21.28%	28	up	up	up
Asian-Pacific	Price	%Chg	Vol%	PMI	ST	MT	LT
EWA (MSCI Australia)	24.15	0.50%	5.78%	35	up	up	up
EWH (MSCI Hong Kong)	16.07	-0.06%	-28.48%	6	up	up	up
EWJ (MSCI Japan)	9.65	-0.10%	-45.53%	11	up	down	up
EWM (MSCI Malaysia)	10.99	-0.36%	-54.11%	55	up	up	up
EWS (MSCI Singapore)	11.28	1.35%	-31.38%	42	up	up	up
EWT (MSCI Taiwan)	12.47	1.38%	-21.54%	55	up	up	up
EWY (MSCI South Korea)	45.75	0.86%	-12.88%	24	up	up	up
FXI (FSTE China)	45.46	0.20%	-16.05%	33	up	up	up
IF (Indonesia Fund)	10.06	0.55%	-31.09%	88	up	up	up
IFN (India Fund)	30.89	0.55%	-8.01%	43	up	up	up
VNM (Vietnam)	28.09	2.15%	-16.89%	50	down	n/a	n/a
Emerging Markets	Price	%Chg	Vol%	PMI	ST	MT	LT
EEM (MSCI Emerging Mkts)	41.27	0.86%	-19.03%	45	up	up	up
EWX (Emerging Small Caps)	46.68	1.04%	-73.55%	56	up	up	up
GAF (Middle East & Africa)	61.47	0.32%	81.76%	33	up	up	up
GMF (Emerging Asia Pacific)	72.90	1.04%	71.26%	19	up	up	up
GML (Emerging Latin America)	78.10	0.22%	-32.18%	30	up	up	up
GUR (Emerging Europe)	43.83	-0.20%	-21.96%	39	up	up	up
Alternative Assets
Commodities	Price	%Chg	Vol%	PMI	ST	MT	LT
CRBQ (Global Commodities)	42.19	0.69%	-15.09%	25	up	down	down
DBA (Agriculture)	25.69	0.78%	-21.31%	13	down	up	up
DBB (Base Metals)	19.88	0.56%	-19.03%	50	down	up	up
DBC (Commodities)	24.21	0.75%	-34.62%	50	up	up	up
GLD (Gold)	109.61	1.13%	5.36%	86	up	up	up
JJC (Copper)	41.16	0.46%	-34.99%	38	up	up	up
JJG (Grains)	39.50	0.28%	-58.97%	3	up	up	up
SLV (Silver)	17.29	1.53%	-3.26%	58	up	up	up
UGA (Gasoline)	36.24	-0.13%	-76.31%	14	up	up	up
UNG (Natural Gas)	9.25	0.22%	-26.48%	21	down	down	down
USO (Oil)	40.55	0.35%	-38.55%	50	up	up	up
Forex	Price	%Chg	Vol%	PMI	ST	MT	LT
BZF (Brazilian Real)	26.97	-0.52%	2.70%	26	up	up	up
CEW (Emerging Currency)	22.28	0.36%	70.57%	58	up	up	up
CYB (Chinese Yuan)	25.36	0.12%	500.83%	22	lateral	lateral	lateral
FXA (Australian Dollar)	93.10	-0.01%	-41.16%	55	up	up	up
FXB (British Pound)	165.18	-1.01%	9.41%	16	up	up	up
FXC (Canadian Dollar)	95.33	0.36%	-56.19%	47	up	up	up
FXE (Euro)	149.63	0.00%	-55.22%	33	up	up	up
FXF (Swiss Franc)	98.78	-0.03%	-21.39%	31	up	up	up
FXM (Mexican Peso)	76.14	0.57%	-7.26%	36	up	up	up
FXY (Japanese Yen)	110.55	0.04%	-83.86%	69	up	up	up
ICN (Indian Rupee)	25.33	0.64%	-28.64%	100	up	up	up
UUP (U.S. Dollar)	22.49	0.22%	4.12%	65	down	down	down
XRU (Russian Ruble)	35.64	0.20%	227.15%	31	up	up	n/a
Bonds	Price	%Chg	Vol%	PMI	ST	MT	LT
AGG (Investment Grade)	104.58	0.04%	-13.74%	34	up	up	up
BWX (Int’l Tsy Bonds)	59.52	0.20%	-8.58%	55	up	up	up
EMB (Emerging Markets Bonds)	102.44	0.05%	-47.34%	72	up	up	up
HYG (Hi Yld Corp)	85.98	0.07%	-41.37%	31	up	up	up
IEF (7-10 Yr Tsy)	91.15	0.25%	-50.80%	26	up	down	down
JNK (Hi Yld Bonds)	38.13	0.37%	-10.37%	59	down	up	up
MBB (Mortgage Bonds)	107.29	-0.02%	-35.91%	56	up	up	up
MUB (Nat’l Muni Bond)	101.97	-0.04%	18.91%	16	down	down	up
SHY (1-3 Yr Tsy)	84.03	0.11%	-57.29%	90	up	up	up
TIP (Tsy Inflation Protect)	105.04	0.34%	-38.43%	63	up	up	up
TLT (20 Yr+ Tsy)	93.67	0.43%	-55.20%	28	down	down	down
WIP (Int’l Inflation Protect)	58.23	0.85%	67.09%	56	up	up	up
Real Estate	Price	%Chg	Vol%	PMI	ST	MT	LT
FIO (Industrial Office)	22.04	1.92%	-86.67%	62	up	up	up
ICF (Cohen & Steers)	49.42	1.88%	75.78%	66	up	up	up
ITB (Home Construction)	12.35	4.40%	3.07%	79	up	down	up
IYR (DJ US Real Estate)	43.13	1.84%	-3.08%	68	up	up	up
REM (Mortgage Reits)	14.59	1.11%	-55.49%	75	up	down	up
REZ (Residential Index)	28.76	0.85%	-82.78%	20	up	up	up
RTL (Retail Index)	19.69	0.00%	-100.00%	n/a	up	down	up
XHB (Homebuilders)	15.22	2.84%	8.43%	45	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 Diary: 11-11-2009

% Stocks > Mov Avg	20-Day MA	50-Day MA	200-Day MA
Today	57.29%	56.92%	86.84%
Yesterday	51.13%	54.56%	85.76%
Last Week	20.27%	36.14%	83.83%
Last Month	72.50%	80.25%	92.17%
Daily Market Stats	NYSE		Nasdaq
Advancers	1899		1686
Decliners	1150		1009
Advancing Shares	2843867100		1393092000
Declining Shares	1596599100		484346200
52 Week New Highs	270		180
52 Week New Lows	6		35

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

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Comments

[Mad Hedge F...:]

kfs If I’ve told you once, I’ve told you a thousand times, stay out of those crummy neighborhoods, where the street corners are crowded with high priced stocks of dubious moral character wearing stiletto heels, fishnet stockings, miniskirts, and shoulder handbags. Sure, I know you young traders have needs, think with your hormones, and believe you can live forever. But if you absolutely have to go slumming, at least use some cheap protection. I noticed today that the January 1030 S&P 500 puts were selling at a bargain $19 today. That means for a mere $950 you can buy some decent downside protection for a $55,000 portfolio that takes you all the way out to January 15, 2010. That is bang on the support level that held in the last sell off. If you double top here on the charts and go down for a retest, you double you money. If yearend profit taking causes us to sell off going into the holidays, and we break that support, you make more. If the market melts down the day after we flip the calendar page to 2010, a distinct possibility, then you hit a home run. If the lemmings keep driving this market up every day for two more months, then you lose $900, or 1.72% of your portfolio, pennies, really, against the huge returns you have booked so far this year. It’s a win, win, win, lose pennies trader. I know that the pros that have done for a long time put these trades on without even thinking about it. It’s all about risk control. Since I am a cheapskate, I only like strapping on trades that have a risk/reward ratio overwhelmingly in my favor, and with the volatility index today a bargain 23%, this fits the bill nicely. Buy your storm insurance when the sun is shining.

Nov 12 08:05 AM