We opened the week with Durable Goods Orders disappointing investors. The Transportation sector was weak pulling down on the entire report. Equities got off to a mixed start, with the DJIA and SPX moving higher at the open, and the NDX pulling back on Techs. All three major averages got a boost after the Euro markets closed, but it was not enough to get the NDX into positive territory. The NDX finished with moderate losses. The DJIA and SPX eked out small gains, but were near their lows of the day at the final bell. At the close, the DJIA slipped 14.7 points, the SPX ended nearly flat, down 0.77 of a point, and the NDX fell 0.44%. Breadth was positive, 2 to 1, on weak volume. ROC(10)’s advanced in the session for all three indices, and remained in positive territory. RSI’s were little changed, with the DJIA still holding the lead with a 63.5. The SPX is at 59.1 and the NDX is now at 53.8. The DJIA had its MACD cross below signal in the session, joining the SPX and NDX. We continue with a caution note near term, though some of the effect is from sideways trading. The ARMS index ended the day at 0.8, a slightly bullish reading. It appeared the Durables Report had a minimal impact on the markets, however, investors were selling Techs again and this had an impact on the NDX. The NDX fell back below its 20D-SMA of 5785, closing at 5777. Its 50D-SMA sits at 5681, which provided support last week. As noted earlier the DJIA MACD crossed below signal, mostly resulting from sideways action. It remains comfortably above its 20D-SMA of 21281. The SPX found support just above its 20D-SMA(2433) at 2437. It met resistance right at its Bollinger Band of 2450 in the session. The VIX fell 1.2% to finish at 9.90. Near term support for the NDX is at 5775 and 5750. Near term resistance is at 5785 and 5800. Near term support for the SPX is at 2433, 2425 and 2412. Near term resistance is at 2450, 2453 and 2462. Europe is moderately lower in early trade. US Futures are pointing lower.
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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.
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