Despite decent economic numbers in the morning on Thursday, the market opened to the downside. Equities quickly reversed and moved to the upside, but in a choppy fashion. The major indices went in and out of positive territory several times. All three major indices made new intra-day highs at one point, but could not hold those gains into the close. By the time the final bell rang, the averages found themselves in the red. The losses were small, but the volume and action continued to depict loss of momentum. At the close, the DJIA fell 31.8 points, the SPX slipped 4.3 points, and the NDX gave up 11.2 points. Breadth was just slightly positive, on below average volume. ROC(10)’s declined in the session, indicating the continued waning of momentum. All three major indices remained in positive territory. RSI’s slipped in the session, with the DJIA the strongest at 77.7. The NDX finished at 64.4 and the SPX at 71.6. MACD’s remain above signal for all three major indices. The ARMS index ended at 1.56, a bearish reading. All three major indices developed a ‘Doji’ candlestick in the session, which indicates indecision and may indicate reversal of direction. The DJIA hit an intra-day high of 22884 in the session, but couldn’t hold those levels and closed at 22841. It closed below yesterday’s record close of 22872. The upper Bollinger Band is now at 22951. Its 20D-SMA is now at 20D-SMA of 22525. The NDX similarly hit a new intra-day high of 6093 and closed below its record closing high of 6081. It closed at 6069. It remains above its 20D-SMA of 5988. The SPX traded at 2555.33, just barely above its intra-day record high. It remains above its 20D-SMA of 2522. IWM lost 0.11 of a point to 149.64. The VIX added 0.06 of a pt. to 9.91. Near term support for the NDX is at 6050 and 6025. Near term resistance is at 6075 Band 6100. Near term support for the SPX is at 2550 and 2537. Near term resistance is at 2555 and 2562. Europe is mixed in early trade. US Futures are slightly higher in the pre-market.
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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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