No Stick Save Friday

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Bulls only have the Fed next Wednesday to give them support. Clearly, and as I’ve been stating the past few weeks, developed markets won’t be able to rally for long when China, Japan, and Emerging Markets have a flat tires. It’s a global market after all. I told our premium members three weeks ago that a market top may be upon us based on our proprietary signals.

The news dominating markets recently has been focused on mixed earnings in the U.S., ongoing problems in China, a budding EM currency crisis, and a continuation of selling in overseas markets. 

Today the focus was on China, which stated it wasn’t about to bailout overly leveraged and indebted companies. From Bloomberg: 

“ China needs to let investors in a troubled trust-investment product suffer losses to demonstrate the true risks and let interest rates reflect market forces," a former central bank adviser said. At the World Economic Forum in Switzerland, Economist Li Daokui said in an interview,  “A  controlled default is much better than a default ,” when asked if a product distributed by Industrial & Commercial Bank of China Ltd. should default.  According to Bank of America Corp,  “The first default of a trust product in at least a decade would shake investors’ faith in their implicit guarantees and spur outflows that may trigger a credit crunch."

Naturally, an event like this runs counter to bailout policies common to central banks in the U.S., England, Europe, and Japan. But tough love is now official policies in China of all places.

Leading markets higher today was just a couple of sectors which included Gold (GLD) and Bonds (TLT). With 2% declines common among most indexes there really isn’t much to highlight beyond inverse issues and VIX related products.

Today we featured a short video on iShares China 25 ETF (FXI) from both weekly and daily chart perspectives.

Our staff also puts together the daily top 20 ETF market movers by percentage change in volume for gainers, decliners and emerging volume. This is a tool that investors can use to shorten their search for suitable ETFs, without being dominated by typical high volume issues or leveraged and/or inverse ETFs.

Volume was massive compared to any day in recent memory. Breadth per the WSJ was overwhelming negative.  


Now that’s what we call a correction such as we haven’t seen in some time.

I suppose most will be looking for the Fed meeting this Wednesday for guidance. But, I wonder if their credibility will be challenged or if investors are just bored with it. We’ll see.

Let’s see what happens.

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