Turnaround Tuesday

Emerging markets received an oversold bounce Tuesday which spilled over to developed and U.S. markets. The gains were in lockstep higher as reversals occurred in virtually every market.

The only economic data Tuesday was Factory Orders ,   which fell to -1.5% vs prior 1.5%. Naturally, as with everything else negative, the weather was to blame. That excuse will get tiresome soon enough.

Gains were led by oversold Emerging Markets (EEM), Brazil (EWZ), India (EPI), Turkey (TUR), China (FXI), Indonesia (IDX), and Russia (RSX). Other gainers in developed markets included: EAFE (EFA), Europe (VGK) Financials (XLF), Banks (KBE), Biotech (IBB), Consumer Discretionary (XLY), Homebuilders (ITB), Oil Exploration & Drillers (XOP), Solar (TAN), Natural Gas (UNG), and Gold Miners (GDX). 

Losers on the day included: Bonds (TLT), Inflation Protected Bonds (TIP), Gold (GLD), Utilities (XLU) and other so-called safe havens. Are you getting the picture now as most market sectors merely traded places for this day. 

Bulls clearly hope it’s a start to repair the serious damage done the past few weeks. Cynics will view the current rally as a dead-cat bounce.

Despite setting expectations this morning for more tapering from Fed Governor Jeffrey Lacker, more POMO action  continued Tuesday, which gave bulls some liquidity to add to the short-covering rally.

Thus far, I’d have to side with the cynics. Perhaps all we had to today was an oversold rally as indicated by the trusty daily McClellan Oscillator (NYMO) featured as one of the charts below.

We’ve had two negative consumer related issues in 2014. First is the tax increase as tax rates under Bush were increased reducing take home pay. The second, the magnitude not yet known, is Obamacare. 

Many individuals have experienced large premium increases already and after the fall election the employer mandate will expire causing more employers to drop coverage or increase employee costs directly to them. This is an unknown drag on consumer spending few are willing to acknowledge. The bottom line these will have a negative impact on consumers.

Volume Tuesday, while healthy, was about 35% beneath Monday’s large sell-off. Breadth per the WSJ was positive reducing oversold conditions.

 

Below are chart presentations for daily top 5 ETF market movers, rising and falling, by percentage change in volume for each category. To permit better discovery inverse or leveraged issues are not included. Market movers are a tool investors can use to shorten their search for suitable ETFs, without being dominated by the usual high volume issues.

Charts are either daily or weekly . Simple Moving Averages are 5 (red) & 10 (green). Proprietary high (HI) and low (LO) indicators can, but not always, indicate a reversal in the trend is at hand.  Find out how you might profit by signing up to be a premium member now. Follow us on twitter and become a fan of ETF Digest on facebook .

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