MARKET COMMENT
Dave Fry’s ETF Digest, July 8, 2009
We had a lot more volume than we’ve seen recently. Short-term equity markets are much oversold while commodity markets continue to get hammered big time. The entire day can be summed up with just those two sentences.
But now we have earnings upon us and Alcoa is kicking things off with unremarkable results. Since they always have unique items in their earnings it’s often hard to judge their reports.
Below is the volume and breadth data with the former impressive while the latter continues its deterioration.
In the meantime it appears with hindsight that the falling McClellan Summation Index was tell predicting this downturn.
Markets are short-term oversold and could bounce at any time. Based on the McClellan Summation Index however, any rally could prove temporary. Now earnings are coming and Alcoa, despite losing around $5 million per day just to stay open, beat estimates. Bulls have bid the stock higher in after hours trading.
This behavior is what we’ve been witnessing for a long time—lower estimates to Armageddon levels and then beat. It becomes annoying after a while.
Nevertheless earnings are important and we’ve only just begun to see them roll out. Results can alter trends in a major way but today wasn’t pretty despite the late pop from those in the know.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, DBC, USL, GLD, EWA, EFA, EWJ and FXI.
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. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
