We may have short memories unless we like viewing long term charts. From the latter we can see the same pattern-a "sell in May & go away" followed by vicious trading ranges. In 2010 the churning lasted until QE began in late August. Then markets rallied until QE ended in June 2011. The violence began once again until December when investors thought the eurozone was "fixed". Now it's the end of May and markets, once again, are in poor shape.
Facts are different certainly. The eurozone is in a state of near collapse ("unfixed"). Government 10 year bond yields from established countries (U.S.; 1.55%, Germany; 1.22% and Japan .90%) are at record lows. What does this imply? Perhaps even depression certainly. And, that prospect might mean another round of QE by June 20th for another "stick save".
There's also an election in Greece on June 16th with the outcome murky at best. More unsettling and painful to observe is U.S. elections in November. I say "painful" since the election will be ugly, personal and petty. It will feature robotic talking points with no serious discussion beyond them. Then there's always the unknown.
Certainly investors and markets are waiting for Friday's payrolls report with great anticipation. Cynically, the "bad news is good, good news is better" theme may well dominate reaction to reports. The worse things are the more likely more QE will be offered. This is Walter White's best crack to addicted trading desks and hedge funds. If things look better from the report it may just be due to tens of thousands who have fallen off the rolls and lost their benefits. That might be ignored by headline spin which is just superficial "anything to sell some ads" for the financial media.
So, I'm not feeling keen about things… can you tell? Maybe I'm just getting old and have been older than the last three presidents-always sobering.
Anyway, the post is short since there's too much tape tension regarding Friday's data. Besides, little happened Thursday beyond crummy economic data. Jobless Claims rose (383K vs 373K prior), ADP Employment (133K vs 154K expected), GDP (1.9% vs 2.2% prior); and, Chicago PMI sunk (52.7 vs 56.3 expected & 56.2 prior). Despite these reports bulls kept things sideways and for the most part, orderly.
Volume did increase Thursday in two-way action. Breadth per the WSJ was as mixed as the markets.
Continue to U.S. Sector, Stocks & Bond ETFs
Continue to Currency & Commodity Market ETFs
Continue to Overseas Sectors & ETFs
The NYMO is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.
The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.
The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.
This sums things up for the day and month of May. Tomorrow investors will key on the employment report; personal income & spending; the PMI; ISM Mfg Index; and, Construction Spending. This is a boatload of data for investors to spin and absorb.
Let's see what happens.
