ETF Market Trends: Just Another 'Debase' Party on Wall Street

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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: 11-24-2009

Investors are really getting strung out on this "debase" party thing going on here at Wall Street. It’s off the hook and Uncle Ben and his fiat pushing G10 central banker’s posse is in the house.

The bond market is sucking up zero to historically low-yielding short-term treasury paper with a ferocity that would rival even the most hardcore crack addict hitting on "somebody else’s pipe". Meanwhile, gold bulls and bugs are smoking up enough IMF, African, Canadian, and any other kind of gold they can score while there is still no serious inflation.

This back and forth between hitting the dollar, equities, and commodities is starting to get a little boring and besides that, the highs (i.e. market swings) do not last as long. Somebody should tell Uncle Ben and his boys (central bankers) that supply is getting very weak. Then again, that’s what happens when you debase a currency.

Volume has been lackluster and the absence of any definitive or sustainable type of market direction is reflecting indecision and most likely confusion of market participants. However, dull markets are the most treachorous, especially for complacent bulls or bears.

Normally, I would refer to PVA stats (see below) for clues, but there was no overwhelming pattern that jumped out in today’s trading.

Regarding economic fundamentals, there are not many strong forces driving this market. I mentioned yesterday that what we witnessing the side effects of excess liquidity.

Oh well, Wednesday will be the last full day of trading for the week and Black Friday should be a rather quiet half-day. While there are still more economic data and treasury auctions to be crammed into us six ways to Sunday, I will just be thankful that the week is over and look forward to resuming the celebration of my birthday which falls on Thanksgiving day.

Price Volume Analysis (PVA) for Hillbent 3000: Although PDVD @ 36.8% is not exactly overwhelming, the edge goes to the bears again for this one. We may also be seeing some early signs of capitulation with PDVU @ 22.27%, but it is probably just short-term traders unwinding riskier positions before the long holiday weekend. There simply is not enough evidence to draw any conclusions from today’s price-volume patterns. (My wife believes that I am masquerading as a modern day financial fortune teller, but this is simply not the case. Sorry folks…)

  1. PUVU: price up & volume up (most bullish) @ 17.20%
  2. PUVD: price up & volume down (indicative of distribution and selling into strength) @ 21.27%
  3. PDVU: price down & volume up (contrarian bullish signal for capitulation and transfer of stocks from weaker hands) @ 22.27%
  4. PDVD: price down and volume down (most bearish based upon lack of buyers to establish support) @ 36.80%

(*Note that the Hillbent 3000 screens 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 capitilization of more than 8000 equity issues trading on U.S. exchanges.)

Bullish Events

  • Economy:
  1. Q3-2009 GDP was revised to 2.8% from the initially reported 3.5%. This was in line consensus expectations and marks the first positive quarter of growth since 2Q-2008. In-depth analysis of the GDP report can be found at Econoday.
  2. S&P/Case Shiller Home Price Indexes increased from 157.93 to 158.61 (qtr/qtr rate @ +3.1%, yr/yr rate @ -8.5%) for the top 10 cities and from 146.0 to 146.51 (yr/yr decline rate @ -9.36%) for the top 20 cities. The most notable areas of improvement were evident in the West and Florida.
  3. The release of FOMC minutes gave the market a boost. Fed governors and district bank presidents project real GDP @ 2.5% to 3.5% in 2010, 3.4% to 4.5% in 2011, and 3.5% to 4.8% in 2012. The report also disclosed the Fed’s commitment to keep interest rates low for "an extended period" if inflation remains stable and high unemployment persists. Its forecasts for unemployment rates are 9.2% to 9.7% through 4Q-2010, -8.2% to 8.6% toward the end of 2011, and 6.8% to 7.5% in 2012. It also made a veiled reference to the carry trade by acknowledging the potential side effects of low interest rates being excessive speculation in the financial markets.
  4. Demand for U.S. debt at the treasury auctions for $32bn of 4-week bills (bid-to-cover @ 4.38) and $42bn of 5-year notes (bid-to-cover @ 2.81) was quite strong.
  • Positive Earnings/Guidance:
  1. Retailers: American Eagle Outfitters ([[AE0]] +3.23%) posted earning $0.21 in line with expectations while discounter Dollar Tree (DLTR +4.54%) reported $0.76 vs. $0.66 consensus estimates and reaffirmed guidance.
  2. Technology: Hewlett Packard (HPQ -1.63%) met earnings expectations as preannounced, delivering $1.14. It also reaffirmed guidance which it had raised earlier. This one gapped down from the opening and never made it into positive territory.
  3. Consumer Goods: Heinz (HNZ +0.14%) posted earnings @ $0.76 vs. consensus @ $0.70; and Hormel Foods (HRL -1.07%) reported earnings @ $0.77 vs. consensus @ $0.74.
  4. Medical: Metronic (MDT +7.29%) reported $0.77 vs. consensus @ $0.74 and increased guidance for the current fiscal year.
  • Upgrades: Healthcare (MDT, AMLN, CEPH); Technology (CRM, ADI); Financials (BCH, UBSI, PRU ); Industrials (NYSE:EMN); Metals (NYSE:RS)
  • European Economic News: Europe’s largest economy, Germany, showed signs of continued economic recovery. The November German IFO business climate increased +1.9 to 93.9 for a 15 month high.
  • From Russia with love: In an effort to revive lending and discourage speculative capital and currency volatility, Bank Rossii, the central bank of Russia, reduced the refinancing rate to 9% from 9.5% and repurchase rate for central bank loans to 8% from 8.5%. These are at record lows and market the marks the 9th rate decrease since April.

Bearish Events

  • Economy: November’s Consumer Confidence data for November improved slightly to 49.5 from previous month’s 47.0. Overall, the reading has negative implications relative to August’s 54.5 level. The present situation index @ 21.0 is at record lows and present jobs assessment @ 49.8.
  • Downgrades: Transportation (CAL, UNP); and Technology (SAP, CIEN).
  • Banking Industry Comments: BofA Merrill Lynch placed UBS on its "least preferrred" list while S&P confirmed it a member of a list of 45 global banks with the weakest capital.
  • TARP Issues: The Fed Reserve asked nine of the largest banks to issue plans on how they intend to repay TARP funds. It’s our money and we want it now!
  • Economic concerns in Europe: November’s Business Confidence index for France was unexpectedly unchanged @ 89. Manufacturers are worried that the relatively strong euro will stifle imports while ending the stimulus could slow consumer spending gains as manufacturers grew more concerned that strength in the euro will hurt exports and the end of stimulus measures will slow gains in consumer spending (despite its upside surprise and being up 1.1% m/m and +3.5% y/y)
  • Carryover from Asia: Markets closed lower throughout the region with Japan (-1.01%), Hong Kong (-1.53%), China (-3.20%), Australia (-0.68%), Singapore (-0.64%), South Korea (-0.84%), India (-0.29%). The exception was Taiwan (+0.36%).
  • Need for Asian banks to replenish capital?: The Bank of China is considering "various options" to replenish capital. China’s top 5 banks submitted plans to regulators the China Banking Regulatory Commission (CBRC) is evaluating the finances of it largest banks and asking them to estimate potential deficits in 2010 based on loan forecasts and capital ratio targets. Banks must formulate long-term fundraising plans or face restrictions on their operations if they maintain "relatively low" capital adequacy ratios. According to BNP Paribas, China’s banks need a combined 368 billion yuan to maintain adequate capital ratios @ 12%. Last year the CBRC increased its minimum capital adequacy ratios from 8% to 10% for publicly traded banks.

ETF 5 Day New Highs:

U.S. Equities (IYZ, XLV*, BBH, IHI*); International Equities (NYSEARCA:GAF); Forex (CEW, FXY, XRU); Bonds (AGG, EMB, IEF, MBB, MUB, SHY); Real Estate (REM, REZ). (Note * denotes 250 day new high)

ETF 5 Day New Lows:

U.S. Equities (VXZ, IAI); International Equities (NYSEARCA:VNM); Commodities (DBA, DBC, JJG, UGA, USO); Forex (DBV, ICN); Real Estate (FIO, ICF, ITB, IYR, REM, RTL). (Note * denotes 250 day new low)

Sooner or later, market participants will come down and hit upon the self-realization that they want a new drug just like Huey Lewis and the News used to sing about back in the day. Until then, I must follow my faithful friend, the trend. Currently there are no signficant changes to the trend tables and the market still has a favorable bias towards risks, i.e. equity, commodity, and emerging market assets.

Signing off at Hillbent on the Market Direction and ETF Market Trends™…

ETF Market Trends Monitor (11-24-2009)

U.S. Equity ETFs
Equity Indexes Price %Chg Vol% PMI ST MT LT
DIA (DJ Industrials) 104.36 -0.10% -16.64% 79 up up up
SPY (S&P 500) 110.99 0.15% -29.90% 82 up up up
QQQQ (Nasdaq 100) 43.99 -0.34% -39.93% 62 up up up
IWM (Russell 2000) 59.34 -0.45% -27.29% 71 up down up
VXX (VIX Futures) 38.41 -1.01% -5.99% 3 down down down
Major Sectors Price %Chg Vol% PMI ST MT LT
IYZ (Telecom) 18.82 0.59% 9.22% 78 up up up
XLB (Materials) 32.73 -0.12% -36.27% 78 up up up
XLE (Energy) 57.66 0.58% -26.15% 98 down up up
XLF (Financials) 14.71 -0.68% -38.39% 45 down down up
XLI (Industrials) 27.73 -0.82% -24.07% 55 up up up
XLK (Technology) 22.03 -0.18% -17.80% 76 up up up
XLP (Consumer Staples) 27.17 0.18% -35.04% 79 up up up
XLU (Utilities) 29.72 0.34% -4.12% 92 up up up
XLV (Health Care) 30.91 0.78% 11.85% 78 up up up
XLY (Consumer Discrtn) 28.92 -0.07% -14.08% 71 up up up
Key Industries Price %Chg Vol% PMI ST MT LT
BBH (Biotech) 98.05 0.67% -46.56% 86 up down up
CRBQ (Global Commodity Equities) 42.75 -1.22% -68.22% 2 up n/a n/a
CUT (Global Timber) 17.46 -0.85% -45.67% 46 up up up
FAA (Airlines) 24.52 -0.53% -83.23% 73 up down n/a
FAN (Global Wind Energy) 15.46 -0.16% -42.71% 27 down down up
FDN (DJ Internet Index) 24.04 -0.58% -37.20% 62 up up up
GDX (Gold Miners) 51.42 -0.50% 10.05% 62 up up up
HAP (Hard Assets Producers) 33.78 -0.44% -71.86% 61 up up up
IAI (Broker-Dealers) 27.97 -0.71% -30.59% 56 down down up
IGF (Global Infrastructure) 34.41 -0.09% -37.45% 92 up up up
IGN (GSTI Networking) 26.09 -0.91% 22.40% 13 down down up
IHI (Medical Devices) 51.94 1.96% 620.97% 98 up up up
ITA (Aerospace & Defense) 49.13 -0.26% -55.86% 66 up up up
IYT (Transportation) 70.86 -0.69% -19.07% 45 down up up
KIE (Insurance) 34.73 0.09% 83.38% 82 down down up
KOL (Coal) 34.65 -0.29% 72.11% 68 up up up
MOO (Agribusiness) 42.73 -0.67% 30.65% 19 up up up
NLR (Nuclear Energy) 22.82 -1.47% -40.22% 49 down down up
OIH (Oil Services) 119.55 0.77% -26.79% 86 down up up
PHO (Water Resources) 16.42 -0.48% -12.64% 62 down down up
PPH (Pharmaceuticals) 65.60 0.40% 20.79% 65 up up up
PXR (Emerging Mkts Infrastructure) 43.25 -0.30% 70.99% 42 up up up
RKH (Regional Banks) 78.21 -0.60% -13.58% 61 down down up
RTH (Retail) 94.65 0.06% -8.69% 59 up up up
SEA (Global Shipping) 13.53 -1.24% -21.35% 60 up up up
SLX (Steel) 58.91 0.03% -78.50% 89 up up up
SMH (Semiconductor) 25.54 0.75% -23.67% 53 down up up
SWH (Software) 40.90 -0.99% -95.22% 0 up up up
TAN (Global Solar Energy) 9.31 -1.17% 11.47% 32 up down up
XME (Metals & Mining) 49.26 0.35% -21.72% 85 up up up
International Equity ETFs
Americas Price %Chg Vol% PMI ST MT LT
EWC (MSCI Canada) 26.02 -0.87% -62.39% 29 up up up
EWW (MSCI Mexico) 48.11 -0.17% -41.84% 69 up up up
EWZ( MSCI Brazil) 76.74 0.71% -33.68% 100 up up up
ILF (Latin America 40) 47.89 0.38% -43.36% 90 up up up
ISI (S&P 1500) 49.66 0.07% -40.39% 100 up up up
Europe Price %Chg Vol% PMI ST MT LT
EWG (MSCI Germany) 22.88 -0.13% -59.69% 64 up up up
EWQ (MSCI France) 26.39 0.19% -31.11% 73 up up up
EWU (United Kingdom) 16.80 -0.06% -41.65% 60 up up up
IEV (S&P Europe 350) 40.21 0.00% -55.80% 60 up up up
RSX (Russia) 31.72 -0.75% -60.34% 68 up up up
VGK (Vanguard Europe) 51.85 -0.17% 14.15% 52 up up up
Asian-Pacific Price %Chg Vol% PMI ST MT LT
EWA (MSCI Australia) 23.41 -1.60% -13.23% 57 down up up
EWH (MSCI Hong Kong) 15.95 -0.56% 1.53% 64 down up up
EWJ (MSCI Japan) 9.30 -1.17% 44.15% 39 down down up
EWM (MSCI Malaysia) 11.00 0.00% -51.59% 78 up up up
EWS (MSCI Singapore) 11.51 -1.20% -51.57% 55 up up up
EWT (MSCI Taiwan) 12.46 -0.08% -27.86% 64 down up up
EWY (MSCI South Korea) 46.14 -1.56% -5.69% 24 up up up
FXI (FSTE China) 45.01 -1.27% -14.12% 43 down up up
IF (Indonesia Fund) 10.31 1.28% -15.36% 78 up up up
IFN (India Fund) 30.57 -0.52% 25.01% 60 down up up
VNM (Vietnam) 27.20 -2.68% -57.44% 23 down down n/a
Emerging Markets Price %Chg Vol% PMI ST MT LT
EEM (MSCI Emerging Mkts) 41.25 -0.60% -17.29% 88 up up up
EWX (Emerging Small Caps) 46.53 -0.47% -81.12% 45 down up up
GAF (Middle East & Africa) 61.58 0.93% 83.73% 75 up up up
GMF (Emerging Asia Pacific) 72.72 -1.05% -39.23% 43 up up up
GML (Emerging Latin America) 78.67 0.32% -57.41% 100 up up up
GUR (Emerging Europe) 43.24 -0.96% -63.73% 73 down up up
Alternative Assets
Commodities Price %Chg Vol% PMI ST MT LT
COW (Livestock) 28.14 -0.07% -65.52% 60 up up down
DBA (Agriculture) 25.93 -0.73% 9.19% 34 up up up
DBB (Base Metals) 20.59 -0.44% -59.99% 63 up up up
DBC (Commodities) 24.07 -1.23% 17.60% 27 down up up
GLD (Gold) 114.73 0.38% 24.49% 90 up up up
JJC (Copper) 43.32 0.51% 16.07% 98 up up up
JJG (Grains) 40.42 -1.77% -48.74% 11 up up up
PTM (Platinum) 17.90 -0.72% -5.77% 11 up up up
SLV (Silver) 18.25 -0.11% 89.80% 85 up up up
UGA (Gasoline) 35.31 -2.08% -66.19% 18 down up up
UNG (Natural Gas) 8.99 -0.55% -37.68% 35 down down down
USO (Oil) 38.58 -2.03% 16.59% 25 down up up
Forex Price %Chg Vol% PMI ST MT LT
BZF (Brazilian Real) 26.85 -0.37% -53.97% 70 down up up
CEW (Emerging Currency) 22.31 0.22% -26.89% 13 up up up
CYB (Chinese Yuan) 25.30 -0.04% -55.37% 33 lateral lateral lateral
DBV (G10 Currencies) 23.31 -1.10% -12.47% 50 down up up
FXA (Australian Dollar) 92.08 -0.66% -31.61% 66 down up up
FXB (British Pound) 165.40 -0.20% 39.79% 82 down up up
FXC (Canadian Dollar) 94.21 -0.22% -43.27% 76 down up up
FXE (Euro) 149.46 -0.03% -27.18% 73 up up up
FXF (Swiss Franc) 98.68 0.03% -29.72% 75 up up up
FXM (Mexican Peso) 77.63 0.43% 105.37% 62 up up up
FXY (Japanese Yen) 112.17 0.51% -35.89% 88 up up up
ICN (Indian Rupee) 24.83 -1.08% -51.32% 0 up up up
UUP (U.S. Dollar) 22.29 0.09% -37.16% 44 down down down
XRU (Russian Ruble) 36.60 1.54% -26.92% 96 up up up
Bonds Price %Chg Vol% PMI ST MT LT
AGG (Investment Grade) 105.36 0.20% -5.93% 77 up up up
BWX (Int’l Tsy Bonds) 59.63 0.08% 8.64% 55 up up up
EMB (Emerging Markets Bonds) 103.03 0.23% 51.37% 90 up up up
HYG (Hi Yld Corp) 86.18 0.06% -27.34% 52 up up up
IEF (7-10 Yr Tsy) 92.18 0.51% 56.37% 83 up up down
JNK (Hi Yld Bonds) 38.05 -0.13% -11.36% 9 down up up
MBB (Mortgage Bonds) 108.04 0.10% -12.48% 42 up up up
MUB (Nat’l Muni Bond) 102.75 0.04% -17.95% 95 up down up
SHY (1-3 Yr Tsy) 84.22 0.08% -20.63% 87 up up up
TIP (Tsy Inflation Protect) 105.88 0.12% -4.78% 68 up up up
TLT (20 Yr+ Tsy) 95.60 0.63% -17.55% 86 up down down
WIP (Int’l Inflation Protect) 57.83 -0.17% -4.15% 65 up up up
Real Estate Price %Chg Vol% PMI ST MT LT
FIO (Industrial Office) 22.22 -2.46% -76.05% 21 up up up
ICF (Cohen & Steers) 48.90 -1.65% -6.14% 15 down up up
ITB (Home Construction) 11.64 -0.77% -38.58% 48 down down up
IYR (DJ US Real Estate) 42.90 -1.47% -18.72% 18 down up up
REM (Mortgage Reits) 14.83 0.47% -23.73% 100 up down up
REZ (Residential Index) 29.17 -0.90% -66.61% 28 up up up
RTL (Retail Index) 19.85 -1.05% 70.00% 32 down down up
XHB (Homebuilders) 14.58 -1.22% -40.08% 29 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: 11-24-2009

% Stocks > Mov Avg 20-Day MA 50-Day MA 200-Day MA
Today 64.52% 52.67% 85.32%
Yesterday 66.34% 53.77% 85.79%
Last Week 68.68% 58.51% 86.99%
Last Month 33.33% 57.36% 88.23%
Daily Market Stats NYSE Nasdaq
Advancers 1385 1093
Decliners 1653 1598
Advancing Shares 1557870200 727234500
Declining Shares 2234288000 1124419000
52 Week New Highs 121 43
52 Week New Lows 4 9
Click to enlarge

Hillbent Market Direction Resources

Selected Reading

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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