Seeking Alpha

Street One Fina...'s  Instablog

Street One Financial
Send Message
Street One Financial LLC (S1F or Street One) is an independent entity affiliated with GWM Group Inc., a full service registered broker dealer and a member of FINRA/SIPC. Street One specializes in educating, evaluating and trading ETFs, equities and options. Our firm assists portfolio managers in... More
My company:
Street One Financial
My blog:
Street One Technical Analysis
  • Today'sTechnical Outlook - 1/11/2013 0 comments
    Jan 11, 2013 8:00 AM | about stocks: XLF, IWM

    Market Summary

    David Chojnacki S1F Market Technician

    The Market moved to the upside at the open and the S&P was quickly trading at new highs. A pull back after the first hour, had the S&P back below 1465, where it straddled both sides of that level for most of the session. A push to the upside, in the last hour and a half, left the indices with moderate gains and the S&P at a new 5 year closing high of 1472. At the close, the DJIA and Nasdaq100 were up 0.6%, and the S&P added 0.76%. Breadth was positive, 2 to 1, on average volume. RSI's moved into the 60's, with the S&P at 64.6. ROC(10's) are positive and advanced in the session. MACD's continue above signal. The Market showed some strength in the session, with the S&P at a new closing high, the DJIA moving above its recent high and volume increasing. The strong technicals continue to favor an upside bias with the DJIA only 140 points from moving to a 5 year high. The Nasdaq100 is lagging the other two major indices in that it needs to move over 4.2% to get into new high territory. This is due partly to the recent weakness in AAPL , which is a large part of the index. We can see the Market strength in other sectors such as Financials, where the XLF is at a two year high and the IWM (Russell 2000) which is at a five year high. With the S&P closing above 1465, we see the next resistance at 1475 and 1488. Support for the S&P now sits at 1465 and 1450. The Nasdaq100 met resistance in the session just below 2750, which is the beginning of a congestion resistance area. The congestion area is between 2750 and 2800. The Nasdaq100 finds support at 2734 and 2725. The VIX was off 2.3% to close at 13.49. The VIX is only a few pennies away from being at 5 year lows. The last time the VIX was at these levels the S&P moved sideways for an extended period. Investors will continue to focus on earnings reports and action in the bond market. European markets are mixed in early trading. Futures are off slightly versus fair value.

    Major Economic Reports Today

    Export/Import Prices-8:30am Trade Balance-8:30am Treasury Budget-2:00pm
    DISCLAIMER LANGUAGE

    ALL PRICES NOTED IN THIS PUBLICATION ARE AS OF THE CLOSE ON TRADING PRIOR TO TODAY'S DATE, UNLESS OTHERWISE INDICATED

    This publication is neither an offer to sell nor a solicitation to buy any securities mentioned herein. The information contained herein is based on data obtained from recognized sources that are believed to be reliable. Street One Financial LLC (S1F) have not independently verified the facts, assumptions and estimates contained in this publication. Accordingly, no representation or warranty, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions contained in this publication. The information contained in this publication is not and does not purport to be a complete analysis of every material fact respecting any company, industry, ETF or other security. Additional information concerning this publication may be available on request, if available. Many of the securities mentioned in this publication involve a higher degree of risk and more volatility than the securities of more established securities. For these and other reasons, the investments discussed in this publication may be unsuitable for investors depending on their specific investment objectives and financial position. Each investor should complete his or her own additional investigation and assessment prior to making investments in any securities. Transactions in securities mentioned herein may be effected only in those states where such securities are qualified for sale. Street One Technical Analysis LLC is an independently owned Company from Street One Financial LLC (S1F). S1F is an independent Company specializing in ETF's, equities, and options utilizing the Broker/Dealer services and licenses of GWM Group Inc., a fully registered Broker Dealer and member of SIPC/FINRA. S1F specializes in agency ETF/ETP, equities, and options trade execution. On the ETF/ETP end, S1F may work with the ETF issuers to understand their products more thoroughly and how they can complement an investor's portfolio. Data sources include ETF Database, ETFTrends.com, IndexUniverse.com, Google Finance, and Bloomberg data and at times other data sources are utilized. Leveraged, Inverse & Leveraged Inverse Conclusions and Risks 1) Leveraged, Inverse, and Leveraged Inverse (L&LI) ETFs generally capture a high percentage of their expected daily returns, particularly on a net asset value basis. 2) L&LI ETFs are not appropriate for all investors. However, we believe they can be appropriate tools for some investors looking to make short-term tactical trades if they perceive a high likelihood of a strong market move occurring in a relatively short time period. In strong trending markets, being on the right side of the "trade" with L or LI ETFs can lead to very strong returns. 3) Investors should not expect these ETFs to deliver total returns linked to their benchmarks over any period other than daily. The effects of compounding and the daily re-leveraging or de-leveraging that occurs with L&LI ETFs can lead to unexpected results over the long term. As a result, we believe longer-term investors should consider regularly rebalancing positions. 4) Trendless markets, particularly those with a high level of volatility, can lead to substantial relative underperformance of L&LI ETFs. 2) Leveraged and Leveraged Inverse (L&LI) ETFs typically utilize futures and equity swap agreements. The use of these derivative instruments increases risk and enhances the possibility of tracking error. Relative to traditional ETFs, leveraged, inverse and leveraged inverse ETFs typically have higher costs and lower tax efficiency. 3) The effects of compounding can lead to significant deviations from traditional benchmarks over longer time periods. For example, if $100,000 is invested in an index that increases in value by 10% on day one and then decreases in value by 10% on day two, the investment will be worth $110,000 at the end of day one and $99,000 after day two. However, the value of a security that doubles the daily performance of the index would be worth $120,000 on day one and $96,000 after day two. Thus, the index is down 1% after two days, a doubling of which would be down 2%. However, the security attempting to double the return of the index is down 4%. Investors should consider carefully the potential impact over longer periods. MLP and MLP ETF Risks Individual MLPs are publicly traded partnerships that have unique risks related to their structure. These include, but are not limited to, their reliance on the capital markets to fund growth, adverse ruling on the current tax treatment of distributions (typically mostly tax deferred), and commodity volume risk. For tax purposes, MLP ETFs are taxed as C corporations and will be obligated to pay federal and state corporate income taxes on their taxable income, unlike traditional ETFs, which are structured as registered investment companies. These ETFs are likely to exhibit tracking error relative to their index as a result of accounting for deferred tax assets or liabilities (see funds' prospectuses). The potential tax benefits from investing in MLPs depend on their being treated as partnerships for federal income tax purposes and, if the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund's value. MLP funds accrue deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments; this deferred tax liability is reflected in the daily NAV; and, as a result, the MLP fund's after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked. Commodity ETF Risks Commodity ETFs may be subject to greater volatility than traditional ETFs and can be affected by increased volatility of commodities prices or indexes as well as changes in supply-and-demand relationships, interest rates, monetary and other governmental policies, or factors affecting a particular sector or commodity. Currency ETF Risks Investments in currency involve additional special risks, such as credit risk and interest rate fluctuations.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: XLF, IWM
Back To Street One Financial's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.