ETF Market Trends: Resurgent Dollar Prevails Once Again Over Riskier Assets

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Includes: AGG, BBH, CEW, DIA, EEM, EWG, EWQ, EWS, EWT, EWU, EWX, EWY, FNIO, FXC, FXI, FXY, GLD, GMF, GUR, ICN, IEV, ITB, IWM, OIH, QQQ, REM, RSX, RTL, SMH, SPY, SWH, TIP, TLT, UNG, USO, VGK, VXX, XHB, XLF, XLK, XLP, XLU
by: J Clinton Hill

ETF Market Direction Summary: 11-20-2009

It is the weekend before my birthday (i.e., Thanksgiving Day) and I am celebrating early, therefore Friday’s summary will be brief. Although I might get a little bent, I still remain faithfully Hillbent on the Market Direction.

A resurgent (but perhaps temporary) rally in the U.S. dollar prevailed once more over riskier assets such as equities and commodity related securities in the absence of any major economic data or other market moving catalysts.

The bears are just starting to feel their oats once again but lest one get prematurely excited, a weekly perspective is in order. The major equity indices were all negative for 3 out of the last 5 trading days this week. However, they were very reluctant to relinquish any of their gains this week from the extended March 2009 bottom rally: (DIA -0.33%; SPY -0.17%; QQQQ -1.3%, and IWM -0.24%). The relative weakness in the Nasdaq 100 underscores the difficult week for technology stocks. The SMH and IGN were standouts in terms of negative performance.

Price Volume Analysis (PVA) for Hillbent 3000: Judging from Friday’s price-volume trading patterns, bears still remain on the prowl and bulls have stepped back. PDVD dominated the trading session with @ 40%. Granted, the SP-500 and SPY respectively were only down -0.32% and 0.36% on the day after another one of the program trading’s infamous hockey stick saves. This time the market really needed it because $108.75 is a critical short-term support level for the SPY.

  1. PUVU: price up & volume up (most bullish) @ 13.10%
  2. PUVD: price up & volume down (indicative of distribution and selling into strength) @ 25.17%
  3. PDVU: price down & volume up (contrarian bullish signal for capitulation and transfer of stocks from weaker hands) @ 19.67%
  4. PDVD: price down and volume down (most bearish based upon lack of buyers to establish support) @ 40.20%

(*Note that the Hillbent 3000, distinct from the Russell 3000 index, comprises the top 3000 market capitalization stocks with a minimum average daily volume of 100,000 shares and also includes ADRs that fall within these parameters. This group represents at minimum @ 95%+ of the aggregate market capitalization of more than 8000 equity issues trading on U.S. exchanges. We believe that this highly liquid group offers a more accurate tracking model for the U.S. equity markets.)
Bullish Events

  • Positive Earnings/Guidance:
  1. Retail / Apparel: AnnTaylor (ANN -1.38%) beat 3Q-2009 First Call EPS estimates by $0.13 with results @ $0.20 per share, but missed on revenues with $462mm vs. $474mm consensus. Gross margin were @ 57.3%, 850 bps higher than 3Q-2008.
  2. Retail / Apparel: Dress Barn (DBRN +5.65%) posted 1Q EPS @ $0.37 to meet consensus estimates, but reportedly 11% more than the average analyst estimate in a Bloomberg survey.
  3. Consumer Goods / Food: JM Smucker (SJM +5.37%), the second best performing stock in the S&P 500, reported 2Q earnings 18% above consensus estimates @ $1.22 eps, raised guidance to $3.95-$4.05 vs. $3.65-$3.80 consensus estimates and reaffirmed FY-2010 revenues @ $4.5bn vs. $4.55bn consensus.
  4. Retail / Home Furnishings: Kirkland’s Inc. (KIRK +18.37%) reported @ $0.23 and crushed consensus estimates by @ 187%. In addition to this, it expects EBITDA in FY-2009 to be "significantly" higher than previous year’s $10.1mm. With @ 8.3% of its float short, an amount equivalent to @ 20% of its 10 day average volume, it was no surprise to see the stock rank the third best performer in the Russell 2000.
  5. Semiconductors: Verigy (VRGY +7.56%) guided 1Q losses @ ($0.09) vs. Bloomberg’s analyst survey @ ($0.14).
  6. Retail / Apparel: Zumiez Inc. (ZUMZ +9.80%) reported 3Q earnings @ $0.17, which was 21% better than the Bloomberg survey for average analyst estimates. Yahoo Finance reports a short interest ratio @ 13.7 as of Oct-30-2009 or (@ 4.36mm shares or 44.8% of the its float). 2.476mm shares were traded vs. its 20 day average volume @ 522k shares. Very interesting…
  • Upgrades: Agriculture (NASDAQ:ANDE); Medical Instruments (MR, CYBX); Tech (NASDAQ:AMSC); Energy (NYSE:HES); Insurance (NYSE:AFL); Retail (NYSE:DDS)
  • Healthcare News:
  1. Merck (MRK +3.20%) led the Dow Industrials after announcing that the Committee for Medicinal Products for Human Use of the European Medicines Agency recommended approval of Elonva, a new fertility drug for women.
  2. Intuitive Surgical (ISRG -0.80%) was granted approval by Japan’s Ministry of Health, Labor and Welfare to market its da Vinci S System.
  • Europe: Goldman Sachs issued a positive outlook for steelmakers, which lifted European stocks in the early part of trading.
  • Europe: October Producer Prices in Germany were less than expected and remained unchanged m/m and -7.6% y/y. This marked the eighth straight month of year-over-year declines.
  • Asia: The BOJ kept interest rates unchanged at 0.1%. It stated the following: "Japan’s economy is picking up mainly due to various policy measures taken at home and abroad, although the momentum of a self-sustaining recovery in domestic private demand remains weak." Its Deputy Prime Minister Kan emphasized that the economy "is in a mild deflationary phase," which some believe pressures the BOJ to increase its accommodative measures such as increasing its purchases of government bonds to fight deflation. Tempering this statement was BOJ Governor Shirakawa who said inflationary expectations are stable and the financial system is solid with little risk of prices going into a deflationary spiral.

Bearish Events

  • Negative Earnings/Guidance:
  1. Personal Computers: Dell (DELL -9.96%) posted 3Q earnings @ $0.23 vs. First Call consensus @ $0.28. Profits and revenues respectively declined 54% and 14.9%.
  2. Consumer Goods / Electronic Equipment: Sony (SNE -0.67%) extended it profitability target and is now looking for a 10% return on equity by March 2013 vs. its previous target date @ March 2011.
  3. Communications Equipment: ADC Telecommunications (ADCT -10.99%) was the 3rd biggest laggard in the Russell 2000 after forecasting 1Q revenue @ $250mm to $275mm vs. analysts estimates @ $270.4mm.
  4. Computer Peripherals: Aruba Networks (ARUN -6.68%) reported 1Q earnings @ ($0.28) vs. estimates @ ($0.04).
  5. Residential Construction: D R Horton (DHI -15.35%) was the weakest component in the S&P 500, slumping 11 percent to $10.96. It reported 4Q earnings @ ($0.73) vs. consensus estimates @ ($0.27).
  6. Retail / Apparel: Wet Seal Inc. (WTSLA -8.48%) guided 4Q profits @ $0.07 vs. consensus estimates @ $0.08 per share.
  • Consumer Credit News: An S&P report stated that the credit crunch could worsen for U.S. consumers. The report tracks the decline in consumer debt from its peak two years ago and surveys the landscape for future lending standards, reductions in consumer spending, and possible changes in regulations affecting the consumer credit industry. It views the proposed consumer protections which limit fee income as having negative repercussions for consumers. For example, as banks attempt to compensate for lost credit card revenues, they might raise borrowing costs for customers, including those with good credit histories. In addition to this, if interest rates increase due to economic recovery, then many consumers could be priced out of the market for certain lending products.
  • Federal Reserve Balance Sheet: The latest report revealed the Fed has increased its balance sheet to levels not seen since December as it added more agencies and mortgage backed securities to its holdings.
  • European Central Bank: ECB President Trichet, at a conference in Frankfurt, suggested that the ECB may be ready to end some of the existing stimulus measures in response to the financial crisis. He stated that "any non-standard measure whose continuation would pose a threat to the achievement of price stability must be undone promptly and unequivocally." Trichet has also guided that the ECB probably will not renew its offer of 12-month loans to banks after December while stating that exit from emergency lending measures need not translate into interest rates hikes anytime soon.

ETF 5 Day New Highs:

U.S. Equities (XLV, PPH); Commodities (NYSEARCA:COW); Forex (NYSEARCA:UUP); Bonds (MUB, SHY). (Note * denotes 250 day new high)

ETF 5 Day New Lows:

U.S. Equities (DIA, IWM, QQQQ, SPY, XLE, XLF, XLI, XLK, XLU, XLY, BBH, CUT, FAN, FDN, HAP, IAI, IGF, IGN, IHI, IYT, KIE, KOL, OIH, PHO, RKH, SEA, SLX, SMH, SWH, TAN, XME); International Equities (EWC, EWZ, ILF, ISI, EWG, EWQ, EWU, IEV, RSX, VGK, EWA, EWT, FXI, IF, EEM, EWX, GAF, GML, GUR); Commodities (NYSEARCA:USO); Forex (BZF, CEW, CYB, DBV, FXA, FXB, FXC, FXF, XRU); Bonds (BWX, EMB, WIP); Real Estate (FIO, ICF, ITB, IYR, RTL, XHB). (Note * denotes 250 day new low)

The trend tables below reveal more collateral damage to equities and commodities. One key development is the new short-term downtrend initiated by the Nasdaq 100 (QQQQ). Now we must see if this move is sustainable. Other sectors and industries have begun to trade below their intermediate uptrend support levels. If these moves prove sustainable, then the potential downside could be more extended in terms of time and distance.

Wishing everyone a Happy & Blessed Thanksgiving and weekend from Hillbent on the Market Direction and ETF Market Trends™…

ETF Market Trends Monitor (11-20-2009)

U.S. Equity ETFs
Equity Indexes Price %Chg Vol% PMI ST MT LT
DIA (DJ Industrials) 103.25 -0.06% -27.95% 73 up up up
SPY (S&P 500) 109.43 -0.36% -31.70% 56 up up up
QQQQ (Nasdaq 100) 43.44 -0.50% -28.69% 59 down up up
IWM (Russell 2000) 58.59 -0.12% -34.78% 70 down down up
VXX (VIX Futures) 41.24 -2.64% 28.49% 18 up down down
Major Sectors Price %Chg Vol% PMI ST MT LT
IYZ (Telecom) 18.33 0.33% -66.79% 85 up up up
XLB (Materials) 32.49 -0.18% -19.09% 83 up up up
XLE (Energy) 56.56 -1.00% -20.82% 55 down up up
XLF (Financials) 14.60 -0.61% -46.75% 40 down down up
XLI (Industrials) 27.47 -0.15% -7.17% 81 up up up
XLK (Technology) 21.69 -0.50% -35.04% 62 down up up
XLP (Consumer Staples) 26.88 0.11% -17.43% 61 up up up
XLU (Utilities) 29.22 0.34% 1.16% 86 down up up
XLV (Health Care) 30.38 0.66% -30.20% 89 up up up
XLY (Consumer Discrtn) 28.69 -0.52% -23.87% 47 up up up
Key Industries Price %Chg Vol% PMI ST MT LT
BBH (Biotech) 96.34 -0.35% 120.94% 67 up down up
CRBQ (Global Commodity Equities) 42.29 -1.31% -54.99% 38 up down down
CUT (Global Timber) 17.26 -0.29% -43.93% 65 down up up
FAA (Airlines) 24.36 -0.60% -36.53% 96 down down up
FAN (Global Wind Energy) 15.21 -2.81% -34.01% 0 down down down
FDN (DJ Internet Index) 23.73 -0.54% -49.42% 70 down up up
GDX (Gold Miners) 50.80 -0.59% -6.77% 90 up up up
HAP (Hard Assets Producers) 33.27 -1.01% -61.72% 30 up up up
IAI (Broker-Dealers) 28.12 -0.60% -56.09% 52 down down up
IGF (Global Infrastructure) 33.87 -0.59% -61.77% 82 down up up
IGN (GSTI Networking) 26.12 -1.17% -59.87% 83 down down up
IHI (Medical Devices) 50.23 -0.55% -45.76% 47 down up up
ITA (Aerospace & Defense) 48.41 0.29% -64.75% 83 up up up
IYT (Transportation) 70.81 -0.17% 86.44% 81 up up up
KIE (Insurance) 34.25 -0.61% -60.87% 61 down down up
KOL (Coal) 34.52 -0.55% -19.02% 83 up up up
MOO (Agribusiness) 42.66 0.28% 15.69% 97 up up up
NLR (Nuclear Energy) 22.78 -0.35% -31.76% 63 down down up
OIH (Oil Services) 117.10 -2.25% -14.38% 24 down down up
PHO (Water Resources) 16.22 -0.37% -16.41% 75 down down up
PPH (Pharmaceuticals) 64.99 1.29% 63.49% 92 up up up
PXR (Emerging Mkts Infrastructure) 43.01 0.58% -54.34% 87 down up up
RKH (Regional Banks) 77.39 -0.45% -55.48% 50 down down up
RTH (Retail) 93.89 -0.16% -3.33% 50 up up up
SEA (Global Shipping) 13.63 -0.73% -47.56% 62 up up up
SLX (Steel) 58.11 -0.31% -5.97% 86 up up up
SMH (Semiconductor) 25.08 -0.48% -37.78% 51 down down up
SWH (Software) 40.75 -0.71% -95.11% 28 up up up
TAN (Global Solar Energy) 9.14 -1.19% -17.07% 71 up down up
XME (Metals & Mining) 48.74 -0.41% 9.78% 90 up up up
International Equity ETFs
Americas Price %Chg Vol% PMI ST MT LT
EWC (MSCI Canada) 25.77 -0.58% -54.01% 85 up up up
EWW (MSCI Mexico) 47.05 -0.57% -51.46% 54 up up up
EWZ( MSCI Brazil) 75.09 -1.00% -36.86% 71 down up up
ILF (Latin America 40) 46.97 -0.97% -29.41% 68 down up up
ISI (S&P 1500) 49.08 -0.16% -51.80% 93 up up up
Europe Price %Chg Vol% PMI ST MT LT
EWG (MSCI Germany) 22.30 -1.28% -70.66% 41 down up up
EWQ (MSCI France) 25.90 -1.45% -57.20% 67 down up up
EWU (United Kingdom) 16.49 -1.38% 4.22% 82 down up up
IEV (S&P Europe 350) 39.41 -1.20% -34.96% 76 down up up
RSX (Russia) 31.35 -0.60% -63.45% 92 up up up
VGK (Vanguard Europe) 50.84 -1.17% -3.99% 71 down up up
Asian-Pacific Price %Chg Vol% PMI ST MT LT
EWA (MSCI Australia) 23.30 -0.94% -30.97% 64 down up up
EWH (MSCI Hong Kong) 15.86 -0.31% -61.88% 90 down up up
EWJ (MSCI Japan) 9.30 0.65% 44.22% 67 down down up
EWM (MSCI Malaysia) 10.96 0.55% -52.39% 67 down up up
EWS (MSCI Singapore) 11.36 0.71% -40.12% 64 up up up
EWT (MSCI Taiwan) 12.35 -0.16% -45.31% 83 down up up
EWY (MSCI South Korea) 46.15 0.85% -41.54% 85 up up up
FXI (FSTE China) 44.59 -0.18% -38.39% 94 down up up
IF (Indonesia Fund) 10.08 0.20% -59.30% 67 down up up
IFN (India Fund) 30.50 0.36% -6.72% 42 up up up
VNM (Vietnam) 28.00 -0.32% -56.20% 71 down down n/a
Emerging Markets Price %Chg Vol% PMI ST MT LT
EEM (MSCI Emerging Mkts) 40.65 -0.42% -22.35% 60 down up up
EWX (Emerging Small Caps) 46.01 -0.60% -78.02% 50 down up up
GAF (Middle East & Africa) 60.02 -0.89% -44.92% 100 down down up
GMF (Emerging Asia Pacific) 72.26 -0.40% -18.36% 23 up up up
GML (Emerging Latin America) 77.14 -0.95% -29.32% 68 down up up
GUR (Emerging Europe) 43.04 -0.76% -45.06% 84 down up up
Alternative Assets
Commodities Price %Chg Vol% PMI ST MT LT
COW (Livestock) 28.06 1.01% -51.67% 100 up up down
DBA (Agriculture) 26.03 -0.31% -15.56% 48 up up up
DBB (Base Metals) 20.68 0.93% -58.71% 100 up up up
DBC (Commodities) 24.26 -0.12% 118.71% 70 up up up
GLD (Gold) 112.94 0.57% -1.59% 100 up up up
JJC (Copper) 43.18 0.98% -65.77% 100 up up up
JJG (Grains) 41.35 -1.12% -61.65% 43 up up up
PTM (Platinum) 17.70 -0.09% -21.27% 32 up up up
SLV (Silver) 18.22 -0.22% -23.63% 97 up up up
UGA (Gasoline) 36.08 0.22% -75.53% 77 down up up
UNG (Natural Gas) 9.01 0.78% -19.82% 88 down down down
USO (Oil) 39.42 -0.61% -16.86% 84 down up up
Forex Price %Chg Vol% PMI ST MT LT
BZF (Brazilian Real) 26.84 -0.37% -3.37% 80 down up up
CEW (Emerging Currency) 22.07 -0.45% 19.81% 13 down up up
CYB (Chinese Yuan) 25.31 0.04% 17.20% 83 lateral lateral lateral
DBV (G10 Currencies) 23.35 -0.43% 0.19% 85 down up up
FXA (Australian Dollar) 91.71 -0.42% -38.85% 90 down up up
FXB (British Pound) 164.66 -0.93% 66.08% 61 down up up
FXC (Canadian Dollar) 93.19 -0.63% 17.41% 70 down down up
FXE (Euro) 148.42 -0.38% 5.75% 71 down up up
FXF (Swiss Franc) 97.83 -0.47% -49.87% 68 down up up
FXM (Mexican Peso) 76.68 -0.16% -75.31% 96 up up up
FXY (Japanese Yen) 111.57 0.06% -51.28% 52 up up up
ICN (Indian Rupee) 25.12 0.36% -56.44% 100 down up up
UUP (U.S. Dollar) 22.44 0.40% -18.73% 38 down down down
XRU (Russian Ruble) 35.55 -0.20% 49.76% 71 up up up
Bonds Price %Chg Vol% PMI ST MT LT
AGG (Investment Grade) 105.15 0.02% -22.20% 71 up up up
BWX (Int’l Tsy Bonds) 59.29 -0.42% -9.76% 71 up up up
EMB (Emerging Markets Bonds) 102.67 -0.08% 63.35% 49 up up up
HYG (Hi Yld Corp) 86.22 -0.02% -25.15% 65 up up up
IEF (7-10 Yr Tsy) 91.81 -0.04% -37.79% 38 up up down
JNK (Hi Yld Bonds) 38.06 -0.05% -3.26% 15 up up up
MBB (Mortgage Bonds) 107.86 0.23% -5.27% 100 up up up
MUB (Nat’l Muni Bond) 102.62 0.04% -22.66% 78 up down up
SHY (1-3 Yr Tsy) 84.16 0.02% -35.03% 25 up up up
TIP (Tsy Inflation Protect) 105.65 -0.01% -28.97% 60 up up up
TLT (20 Yr+ Tsy) 95.12 -0.02% 14.83% 68 up down down
WIP (Int’l Inflation Protect) 57.56 -0.17% -21.75% 73 down up up
Real Estate Price %Chg Vol% PMI ST MT LT
FIO (Industrial Office) 22.33 -0.23% 70.70% 29 up up up
ICF (Cohen & Steers) 49.20 -0.65% -33.60% 53 up up up
ITB (Home Construction) 11.61 -2.85% 90.31% 29 down down up
IYR (DJ US Real Estate) 43.05 -0.76% -33.62% 43 up up up
REM (Mortgage Reits) 14.79 0.07% -2.57% 58 up down up
REZ (Residential Index) 29.21 0.31% -52.52% 94 up up up
RTL (Retail Index) 20.06 -0.74% -87.00% 21 up up up
XHB (Homebuilders) 14.58 -1.69% -41.24% 44 down down up
Click to enlarge

*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: 11-20-2009

% Stocks > Mov Avg 20-Day MA 50-Day MA 200-Day MA
Today 55.67% 46.77% 84.39%
Yesterday 55.91% 48.55% 84.71%
Last Week 53.90% 51.25% 85.35%
Last Month 50.84% 68.28% 89.77%
Daily Market Stats NYSE Nasdaq
Advancers 1279 1235
Decliners 1752 1441
Advancing Shares 1328538100 638925800
Declining Shares 2498761200 1319690200
52 Week New Highs 74 26
52 Week New Lows 3 8
Click to enlarge

Hillbent Market Direction Resources

Key Market Moving Events for the week of 11-23-2009 to 11-27-2009:

  • Monday (11-23-2009)–> Existing Home Sales; Earnings (ADI, BJS, CPB, HPQ, TSN)
  • Tuesday (11-24-2009)–> GDP; Corporate Profits, S&P Case Shiller Home Price Index, Consumer Confidense, FHFA House Price Index, Treasury Auctions (4-week, 5-year), FOMC Minutes, and Earnings (HNZ, HRL, MDT)
  • Wednesday (11-25-2009)–> Durable Goods Orders, Personal Income & Outlays, Jobless Claims, Consumer Sentiment, New Home Sales, EIA Petroleum Status Report, EIA Natural Gas Report, 7-Yr Note Treasury Auction, and Earnings (DE, TIF)
  • Thursday (11-26-2009)–> Markets are closed for Thanksgiving Day! (which begins with a rigorous morning workout followed by quality time with family & friends to express gratitude for our blessings; and indulgence in lots of turkey, football, beer/wine, and a well-deserved nap)
  • Friday (11-20-2009)–> An early close, but do not ignore the Fed Balance Sheet and Money Supply reports scheduled to be released @ 4:30 pm EST.

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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