ETF Market Trends: Audacity of Hope for Global Economic Recovery Is Sustained

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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-OLD, SMH, SPY, SWH, TIP, TLT, UNG, USO, VGK, VXX, XHB, XLF, XLK, XLP, XLU
by: J Clinton Hill

ETF Market Direction Summary (12-01-2009)

Investor fears subsided on Tuesday after Dubai World conveyed that it is working to restructure $26bn of debt and that its other liabilities remain "stable". This alone was enough to relieve worries of the initially reported rumors of potential default ranging from $60bn to $80bn.

Meanwhile, the audacity of hope for a global economic recovery still lives. While U.S. economic reports were a mixture of bullish and bearish data, China’s manufacturing grew at its fastest pace in 5 years.

All of the above demoted the U.S. dollar once again to "whipping boy" status and the positive performance of riskier assets broadened in breadth and momentum as stocks and commodities continued to add to Monday’s gains.

Price Volume Analysis (PVA) for Hillbent 3000: Of course, no Hillbent market diagnostic report would be complete without a look underneath the hood. Advancers clearly outpaced decliners, but the day was almost evenly divided between genuine bulls (PUVU) and their impostors (PUVD). However, the SPY, DIA, and QQQQ may be signaling clues of distribution with below average volume and negative momentum. The contrarian of the major U.S. equity averages remains the IWM, which managed to trade up on above average volume. Overall, the quality of this two day rally leaves me a little suspicious and I would prefer to see U.S. equity averages take out their November highs before committing fresh capital.

  1. PUVU: price up & volume up (most bullish) @ 40.13%
  2. PUVD: price up & volume down (indicative of distribution and selling into strength) @ 43.03%
  3. PDVU: price down & volume up (contrarian bullish signal for capitulation and transfer of stocks from weaker hands) @ 7.90%
  4. PDVD: price down and volume down (most bearish based upon lack of buyers to establish support) @ 7.43%

(*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.)

Despite the lack of volume, the trends for ETFs are reasserting their bullish direction. Standouts continue to be commodity and emerging market ETFs whose advances are actually being supported by rising volume. Retail (NYSEARCA:RTH) and Semiconductors (NYSEARCA:SMH) re-established their short-term uptrends, but on weaker volume.

Bullish Events

  • Economic Data:
  1. November’s Domestic Motor Vehicle Sales report exceeded expectations despite the expiration of cash-for-clunkers and high unemployment. Annualized sales came in @ 8.2mm vs. consensus @ 7.75mm and previous month @ 7.9mm.
  2. October’s Pending Home Sales index registered a 3.7% monthly improvement @ 114.1 vs. previous month @ 110.1. Housing could be showing signs of a bottom as the report’s annualized pending sales are up 31.8%.
  3. $30bn Treasury Bill Auction: Demand for the 4-week treasury bill auction was extremely strong with a bid-to-cover ratio @ 4.07.
  4. China PMI: China’s manufacturing increased +0.3 to 55.7, thus marking its highest level in 5 years and supporting views of an imminent global recovery.
  5. Bank of Japan Emergency Board Meeting: The BOJ will offer 3-month loans at 0.1% to commercial banks and will enlist a 10trn yen ($115bn) economic program to battle deflation and the yen’s surge to a 14-year high. The BOJ is also expected to increase its QE measures to 2.2trn to 2.5trn yen in asset purchases over the coming months.
  6. The Reserve Bank of Australia (RBA) increased interest rates for the third consecutive month. The 25bps move to 3.75% was based upon continuing signs of strength in the Australian economy.
  7. Europe’s PMI: November PMI manufacturing indexes for France, Germany and the Euro-Zone were revised upward to +0.2 @ 51.2 for a 20-month high.
  8. German Unemployment & Retail Sales: Unemployment in Germany came in better than expected @ -7k to reflect a rate @ 8.1%. Retail sales in October increased +0.5% and exceeded expectations.
  • Positive Earnings/Guidance:
  1. Semiconductor Industry: Altera Corp. (NASDAQ:ALTR) issued positive sales guidance for 4Q @ $330mm to $338 vs. consensus estimates @ $326mm. This reflects a 15% to 18% growth rate from 3Q vs. previous guidance @ 6% to 10%. The company believes sales to wireline and wireless telecom equipment makers contribute the most to its growth as demand from Chinese and Indian deployments continue to improve.

  2. Semiconductor Industry: Due to solid bookings and sales in October thru November, Microchip (NASDAQ:MCHP) issued positive 3Q guidance with revenues @ $240.3mm - $244.8mm vs. previous guidance @ $234.7mm - $244.8mm and EPS @ $0.29 vs. previous gudiance @ $0.27 - $0.29. It also projects an improvement in margins and operating expenses.
  3. Retail Industry: Guess? Inc. (NYSE:GES) reported EPS @ $0.69 vs. consensus @ $0.51 and issued positive 4Q guidance @ $0.77 - $0.80 vs. consensus @ $0.69 and revenues @ $584mm - $605mm vs. consensus @ $563.8mm. The company sees its future growth coming from increased market share and international expansion into other countries.
  4. Retail Industry: Staples Inc. (NASDAQ:SPLS) reported 3Q EPS @ $0.39 vs. consensus @ $0.38 and revenues @ $6.52bn vs. consensus @ $6.45bn; and issued in-line guidance for 4Q earnings and revenues.

  • News Events:
  1. Carryover from Asian Markets: Japan +2.43%, Hong Kong +1.34%, China +1.40%, Taiwan +0.88%, Australia +0.38%, Singapore +1.42%, South Korea +1.13%, India +1.61%
  2. Carryover from European Markets: London FTSE +2.34%, German DAX +2.68%, Paris CAC +2.60%
  3. Insurance: American International Group Inc. (NYSE:AIG) had the biggest advance in the Standard & Poor’s 500 Index, rallying 11 percent to $31.53. The insurer said it reduced debt owed to the Federal Reserve Bank of New York by $25bn (from $60bn to $35bn) after handing over stakes in two overseas units.
  4. Precious Metals: Barrick Gold (NYSE:ABX) demonstrated its bullish view on gold prices by announcing the elimination of all its gold hedges. This move gives the company, one of the industry’s largest gold producers and owner of reserves, full leverage to gold prices.
    Bearish Events
  • Economic Data:
  1. November’s ISM Manufacturing Index was below expectation with a report @ 53.6 vs. consensus @ 55.0 and previous month @ 55.7. A detailed analysis of the report can be found at Econoday.
  2. Casting a shadow over a better than expected Construction Spending report was September’s downward revision from 0.8% to -1.6%. October’s activity was unchanged @ 0.00% vs. consensus expectations @ -0.4%. On a yr/yr basis, construction spending improved slightly from -15.8% to -14.4%. The residential construction spending component increased 4.4% m/m.

ETF 5 Day New Highs: (Note * denotes 250 day new high)

  • U.S. Equities (DIA*, QQQQ, SPY, XLB*, XLI, XLK, XLU, XLV*, XLY, CRBQ, CUT, FAA, FDN, GDX*, HAP*, IGF*, IYT, MOO, PPH*, RKH, RTH*, SLX*, SMH, TAN, XME)
  • International Equities (EWC, EWW*, EWZ*, ILF*, ISI, EWA, EWH, EWJ, IFN, EEM, EWX, GMF, GML*)
  • Commodities (DBA, DBB*, DBC*, GLD*, JJC*, JJG, PTM*, SLV*, UGA, USO)
  • Forex (BZF, FXC)
  • Bonds (BWX*, WIP*)
  • Real Estate (FIO, ICF, IYR, REM, REZ, RTL)

ETF 5 Day New Lows: (Note * denotes 250 day new low)

  • U.S. Equities (FDN)
  • Forex (CYB, UUP*)
  • Bonds (EMB, MBB, MUB, SHY)

Signing off at Hillbent on The Market Direction and ETF Market Trends

ETF Market Trends Monitor (12-01-2009)

U.S. Equity ETFs
Equity Indexes Price %Chg Vol% PMI ST MT LT
DIA (DJ Industrials) 104.73 1.11% -17.61% 53 up up up
SPY (S&P 500) 111.30 1.24% -19.17% 61 up up up
QQQQ (Nasdaq 100) 44.02 1.06% -18.99% 33 up up up
IWM (Russell 2000) 58.99 1.55% 1.48% 69 down down up
VXX (VIX Futures) 38.79 -3.70% -32.21% 22 down down down
Major Sectors Price %Chg Vol% PMI ST MT LT
IYZ (Telecom) 18.94 1.94% 240.35% 96 up up up
XLB (Materials) 33.13 1.94% 3.01% 51 up up up
XLE (Energy) 57.57 1.32% -28.09% 20 up up up
XLF (Financials) 14.67 0.07% -12.63% 38 down down up
XLI (Industrials) 27.95 1.60% -26.71% 69 up up up
XLK (Technology) 22.10 1.61% -0.05% 79 up up up
XLP (Consumer Staples) 27.15 1.38% -23.87% 97 up up up
XLU (Utilities) 30.32 1.88% 37.65% 98 up up up
XLV (Health Care) 31.22 1.76% -2.17% 100 up up up
XLY (Consumer Discrtn) 29.06 1.54% -5.75% 59 up up up
Key Industries Price %Chg Vol% PMI ST MT LT
BBH (Biotech) 98.20 0.94% -59.02% 79 up down up
CRBQ (Global Commodity Equities) 43.74 3.50% -55.74% 84 up n/a n/a
CUT (Global Timber) 17.97 2.33% 64.47% 86 up up up
FAA (Airlines) 26.20 3.27% -20.51% 99 up up n/a
FAN (Global Wind Energy) 15.53 1.50% -26.49% 50 down down up
FDN (DJ Internet Index) 24.13 1.30% 46.54% 89 up up up
GDX (Gold Miners) 53.67 5.02% 5.86% 68 up up up
HAP (Hard Assets Producers) 34.47 3.02% -50.62% 91 up up up
IAI (Broker-Dealers) 27.68 0.47% 236.58% 54 down down up
IGF (Global Infrastructure) 34.87 1.84% -26.77% 79 up up up
IGN (GSTI Networking) 26.15 2.19% 145.96% 97 down down up
IHI (Medical Devices) 51.80 1.01% -40.38% 32 up up up
ITA (Aerospace & Defense) 49.16 1.55% 19.33% 68 up up up
IYT (Transportation) 71.78 1.43% 1.89% 59 up up up
KIE (Insurance) 34.49 0.58% -26.02% 44 down down up
KOL (Coal) 34.84 2.29% 95.35% 32 up up up
MOO (Agribusiness) 44.12 3.06% 189.92% 85 up up up
NLR (Nuclear Energy) 23.13 2.16% -17.51% 69 up down up
OIH (Oil Services) 119.77 1.19% -40.48% 22 down down up
PHO (Water Resources) 16.25 1.37% -16.79% 66 down down up
PPH (Pharmaceuticals) 66.26 1.33% -32.60% 82 up up up
PXR (Emerg Mkts Infrastructure) 43.43 3.63% 23.08% 89 up up up
RKH (Regional Banks) 78.73 0.05% -33.35% 54 up down up
RTH (Retail) 95.10 1.46% -21.90% 71 up up up
SEA (Global Shipping) 13.44 1.74% 298.98% 57 down up up
SLX (Steel) 59.94 2.62% -47.85% 42 up up up
SMH (Semiconductor) 26.17 2.79% -22.70% 90 up up up
SWH (Software) 41.20 1.75% -90.44% 95 up up up
TAN (Global Solar Energy) 9.58 3.12% -34.42% 67 up up up
XME (Metals & Mining) 49.85 1.94% 0.14% 32 up up up
International Equity ETFs
Americas Price %Chg Vol% PMI ST MT LT
EWC (MSCI Canada) 26.71 3.09% 8.21% 83 up up up
EWW (MSCI Mexico) 49.71 3.76% 34.05% 70 up up up
EWZ( MSCI Brazil) 78.92 3.21% -8.22% 71 up up up
ILF (Latin America 40) 49.07 2.51% -23.14% 56 up up up
ISI (S&P 1500) 49.92 1.42% -57.47% 99 up up up
Europe Price %Chg Vol% PMI ST MT LT
EWG (MSCI Germany) 22.98 2.13% -33.41% 61 up up up
EWQ (MSCI France) 26.55 2.67% -43.35% 81 up up up
EWU (United Kingdom) 16.71 2.70% -50.01% 50 down up up
IEV (S&P Europe 350) 40.25 2.34% -2.30% 71 up up up
RSX (Russia) 31.21 3.79% 59.27% 78 down up up
VGK (Vanguard Europe) 51.87 2.71% 80.75% 74 up up up
Asian-Pacific Price %Chg Vol% PMI ST MT LT
EWA (MSCI Australia) 23.91 2.49% 2.41% 59 up up up
EWH (MSCI Hong Kong) 16.18 2.02% -9.87% 25 up up up
EWJ (MSCI Japan) 9.89 3.45% 202.23% 76 up up up
EWM (MSCI Malaysia) 10.95 0.83% -14.27% 56 down up up
EWS (MSCI Singapore) 11.57 1.85% 59.11% 54 up up up
EWT (MSCI Taiwan) 12.43 1.64% 44.02% 13 down up up
EWY (MSCI South Korea) 45.59 2.73% -9.35% 75 down down up
FXI (FSTE China) 44.91 2.77% 15.14% 51 down up up
IF (Indonesia Fund) 10.22 1.69% -5.37% 77 down up up
IFN (India Fund) 31.31 3.33% 8.49% 97 up up up
VNM (Vietnam) 26.11 3.00% -30.76% 54 down down n/a
Emerging Markets Price %Chg Vol% PMI ST MT LT
EEM (MSCI Emerging Mkts) 41.68 2.86% 2.67% 72 up up up
EWX (Emerging Small Caps) 47.05 2.30% -22.77% 83 up up up
GAF (Middle East & Africa) 61.51 1.32% 53.78% 0 up up up
GMF (Emerging Asia Pacific) 73.76 2.34% -29.61% 83 up up up
GML (Emerging Latin America) 80.91 3.18% 9.08% 76 up up up
GUR (Emerging Europe) 42.46 2.88% 165.20% 41 down up up
Alternative Assets
Commodities Price %Chg Vol% PMI ST MT LT
COW (Livestock) 28.19 -0.74% -52.45% 13 up up down
DBA (Agriculture) 26.60 0.42% -2.15% 11 up up up
DBB (Base Metals) 21.33 1.91% 118.38% 71 up up up
DBC (Commodities) 24.88 0.89% 15.86% 18 up up up
GLD (Gold) 117.41 1.53% 52.57% 55 up up up
JJC (Copper) 44.14 1.51% -47.96% 63 up up up
JJG (Grains) 42.03 -0.11% 209.19% 23 up up up
PTM (Platinum) 19.12 3.30% -23.27% 80 up up up
SLV (Silver) 18.77 3.42% 49.29% 68 up up up
UGA (Gasoline) 36.74 1.27% 593.58% 33 up up up
UNG (Natural Gas) 9.04 -1.20% 37.01% 39 down down down
USO (Oil) 39.61 1.17% -17.01% 8 up up up
Forex Price %Chg Vol% PMI ST MT LT
BZF (Brazilian Real) 26.97 2.04% 60.44% 34 up up up
CEW (Emerging Currency) 22.35 0.90% 139.55% 19 up up up
CYB (Chinese Yuan) 25.29 0.00% 13.04% 67 lateral lateral lateral
DBV (G10 Currencies) 23.14 1.22% 141.99% 56 down down up
FXA (Australian Dollar) 92.49 1.00% -0.02% 65 down up up
FXB (British Pound) 165.75 1.02% -45.76% 62 down up up
FXC (Canadian Dollar) 95.28 0.89% -0.19% 12 up up up
FXE (Euro) 150.64 0.48% -13.00% 21 up up up
FXF (Swiss Franc) 99.56 0.39% -37.64% 3 up up up
FXM (Mexican Peso) 77.85 0.76% 6.31% 100 up up up
FXY (Japanese Yen) 114.55 -0.26% 146.96% 55 up up up
ICN (Indian Rupee) 25.17 0.00% -55.96% 0 down up up
UUP (U.S. Dollar) 22.06 -0.50% -20.57% 57 down down down
XRU (Russian Ruble) 34.50 0.53% -41.93% 13 down up up
Bonds Price %Chg Vol% PMI ST MT LT
AGG (Investment Grade) 105.17 -0.29% 46.06% 0 down up up
BWX (Int’l Tsy Bonds) 60.61 0.56% 1.17% 49 up up up
EMB (Emerging Markets Bonds) 102.24 0.28% 21.22% 85 down down up
HYG (Hi Yld Corp) 85.70 0.49% 3.32% 73 down up up
IEF (7-10 Yr Tsy) 92.35 -0.54% 9.86% 14 up up down
JNK (Hi Yld Bonds) 37.93 0.38% 54.72% 82 down down up
MBB (Mortgage Bonds) 107.76 -0.21% 132.08% 26 down up up
MUB (Nat’l Muni Bond) 102.74 0.08% 12.01% 61 up down up
SHY (1-3 Yr Tsy) 83.77 -0.56% 58.21% 25 down down down
TIP (Tsy Inflation Protect) 106.16 -0.19% 3.70% 10 up up up
TLT (20 Yr+ Tsy) 95.23 -1.14% 13.31% 5 up down down
WIP (Int’l Inflation Protect) 58.69 1.00% 81.58% 73 up up up
Real Estate Price %Chg Vol% PMI ST MT LT
FIO (Industrial Office) 22.58 4.56% 54.30% 90 up up up
ICF (Cohen & Steers) 50.31 1.23% -0.76% 72 up up up
ITB (Home Construction) 11.64 1.66% 93.05% 54 down down up
IYR (DJ US Real Estate) 43.98 1.29% -11.14% 70 up up up
REM (Mortgage Reits) 14.82 -0.47% -61.02% 14 up down up
REZ (Residential Index) 29.95 1.76% 171.59% 87 up up up
RTL (Retail Index) 20.24 0.70% 3397.07% 53 up up up
XHB (Homebuilders) 14.66 2.30% -30.68% 68 down down up

*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: 12-01-2009

% Stocks > Mov Avg 20-Day MA 50-Day MA 200-Day MA
Today 63.62% 54.40% 84.55%
Yesterday 51.17% 47.57% 83.34%
Last Week 66.43% 53.52% 85.77%
Last Month 16.13% 33.02% 84.30%
Daily Market Stats NYSE NASDAQ
Advancers 2452 1878
Decliners 622 854
Advancing Shares 3478697800 1725714300
Declining Shares 943479200 434523300
52 Week New Highs 281 158
52 Week New Lows 2 27

Hillbent Market Direction Resources

Investor’s Selected Reading: N/A

Economic Calendar Events: Refer to U.S. Calendar or International Calendar

Positive & Negative Earnings Surprises: Refer to Hillbent’s earnings summary report for a detailed analysis of positive & negative earnings surprises

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