Courtesy of John Nyaradi.
U.S. stocks and ETFs showed no sign of life today as jobless claims jumped and tech darling, Google, laid an egg.
It was a dull day on Wall Street with glum news from the unemployment numbers in which unemployment jumped 13%, however, that sad number was offset by positive leading economic indicators and a relatively upbeat Philadelphia Fed report. Surge In Unemployment Offsets Two Positive Reports.
The day started out positively enough with a positive bond auction in Spain but the market seesawed all day until Google (GOOG) dropped its earnings bomb ahead of schedule which sent the Nasdaq 100 (NYSEARCA:QQQ) into a tailspin that started just after lunch and took 1% off the Nasdaq 100 (NYSEARCA:QQQ) and 1.2% off SPDR Select Sector Technology ETF (NYSEARCA:XLK)
The tech sector did little better later in the day as Microsoft reported more than a 20% drop in earnings and AMD whacked about 15% of its workers. Google (NASDAQ:GOOG) plunged about 8% today on worries over its advertising revenue.
Technology has been weak for sometime now with the Nasdaq 100 (NYSEARCA:QQQ) below its 50 day moving average and declining momentum, while earnings from the likes of Google (GOOG) Intel (INTC) and Microsoft (MSFT) have been less than inspiring.
The market seems to be stuck in this sideways channel, and oftentimes, these can be indications of a Major Top? in spite of the S&P 500′s (NYSEARCA:SPY) significant gains so far this year.
Supporting the idea of a major top, Dr. Copper and the Euro Continue Making Lower Highs and Dallas Fed President Richard Fisher recently said “Nobody really knows what will work to get the economy back on course. And nobody-in fact, no central bank anywhere on the planet-has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank-not, at least, the Federal Reserve-has ever been on this cruise before.” QE Inifnity Won’t Work But Here’s What Will
And in today’s volatile markets, maybe it’s Time To Consider Wide Moat ETFs
Tech Talk
chart courtesy of StockCharts.com
In the chart of the S&P 500 (NYSEARCA:SPY) above, we see how the index appears to be in the process of forming a triple top, which if completed would indicate increased possibility for more downside price action. Relative strength is declining while momentum tries to turn positive, but it will be hard to move higher on news like today’s from Google.
Major indexes also exhibit technical weakness with the Dow Jones Industrial Average (NYSEARCA:DIA) S&P 500 (NYSEARCA:SPY) and Russell 2000 (NYSEARCA:IWM) all on point and figure sell signals within an ongoing uptrend.
Thelonger the sideways channel continues, the more likely it becomes that the ensuing breakout, up or down, will become quite powerful.
Major Index ETFs:
Dow Jones Industrial Average (NYSEARCA:DIA) -0.06%
S&P 500 (NYSEARCA:SPY) -0.24%
Nasdaq 100 (NYSEARCA:QQQ) -1.13%
Russell 2000 (NYSEARCA:IWM) -0.64%
Bottom line: Earnings continue to disappoint in a big way and unemployment remains stubbornly high. QE3 remains a driving force in global markets, but in light of faltering earnings and mixed economic reports, a chilling question comes to mind: what if QE to Infinity is not enough?
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