It's not like words fail me, it's that volume and waiting do. I didn't post yesterday, as volume on much watched SPY was only (cough) 65M shares. That's even less than a half-day holiday-like trading. Markets followed by doing little. What's the point of even discussing it? As long as economic data dominates without market reaction, it's hard to write much. I may continue light posting until Friday if this persists.
All eyes are glued to whatever hints develop before Jackson Hole and events that follow in rapid fire succession in September. Traders (wish I had done the same) have taken the last two weeks of August off. That in itself isn't unusual, but this lack of action is extreme. Clearly, those less fortunate junior traders have been left in foxholes to defend the market status quo. Both bulls and bears are essentially sidelined.
The Fed's oracle, Hilsenrath, is awaiting orders and targeted leaked information to assuage investors, causing algos to jump or not. Early on it was noted the ECB's Mario Draghi would be making an appearance, and might have been the star of the Jackson Hole show. But today he backed out. Some have rationalized this to mean he either didn't want to steal the limelight from Bernanke, or he had no ability to confirm previous statements to "defend the euro at all costs" and etc. Perhaps this might mean Bernanke will reveal new actions in his speech on Friday. If he has the authority to implement another round of QE, he must have gotten votes to do so via a conference call with other voting Fed governors. But I speculate.
Spain's GDP shrunk once again to -.4%, which seemed generous given the news backdrop. The Catalan province "demanded" a €5 billion bailout "without" any conditions. (Beggars are now choosers.)
The Basel Group is now under direct ECB pressure to relax new liquidity rules for banks, which some might surmise would allow for additional misbehavior.
Not to be left out, Japan is lowering its GDP estimates, but can't really find a firm number to assign to it. Let's just say things aren't good.
In the U.S., Consumer Confidence imploded (60.6 vs. 65.8 expected, and prior 65.9), or a 9 month low. This was quite stunning, and may be the result of rising gas prices and ongoing joblessness. You wouldn't have known this by the Consumer Discretionary sector (XLY), which rallied on the news. This reflects the "bad news is good" theme for QE pimps. Bulls liked that home prices rose .9%, or the same as in June, although it seems to me this is the season for home buying. But even Shiller commented that improvement was nice, but there wasn't a rush to buy. The Richmond Fed Index was better, but still weak at -9.
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Wednesday will feature U.S. GDP data, Corporate Profits and Pending Home Sales. This is an intense week for economic data, although the featured player remains the Bernank.
The dollar (UUP) was weak, while gold (GLD) and silver (SLV) were higher. Oil (USO) was only slightly higher, keeping commodity tracking ETF (DBC) only slightly better on the day. Bonds (IEF) once again rose on the weak overall economic data.
Stocks limped along throughout the day Tuesday, closing mostly unchanged. Volume was once again ultra-light and breadth per the WSJ was mixed overall.
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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.
As you may recall, I did post a weekly DeMark 9 setup for the VIX last week. That was the low for now, but markets are only moving sideways while the VIX itself is higher. Investors must no doubt be buying some protection against a poor Bernanke result.
Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current "trading" positions in active portfolios if any are embedded within charts: Lazy & Hedged Lazy Portfolios maintain the follow positions: VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, & EWU.
The charts and comments are only the author's view of market activity and aren't recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren't predictive of any future market action, rather they only demonstrate the author's opinion as to a range of possibilities going forward.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
