Another day, another breakout in the US Dollar, as the Dollar Index (DXY) broke to new highs since March, creating a short-term parabolic move in the process. The main catalyst of the day was the release of the FOMC minutes, during which it was revealed that “U.S. central bankers debating the merits of raising interest rates last month described the decision as a close call, with several saying a rate hike was needed “relatively soon,””
Treasury Bonds, which had been under pressure since the beginning of the quarter, erased earlier losses and posted a potential bullish reversal. The TLT has been able to hold the Sept lows and yesterday created a bullish hammer candle, setting the stage for a relief rally.
Major US equity indices including SPX and Dow were flat on the day, while Nasdaq was slightly red, dragged down mainly by the beleaguered Biotechs (IBB) once again. Utilities (XLU) and REITs (IYR) were outperforming sectors of the day on stabilizing interest rates, which we had been anticipating.
The IYR is particularly bullish with a bullish engulfing candle launched off the 200DMA, and should have follow-through towards the 20DMA.
The Biotechs once again could not get a break, as IBB broke through recent consolidation and threatens to close under 20WMA, which has been a critical pivot in recent years. Absent a rally back above, 200WMA will be a magnet on the downside.
Switching gears, oil fell under 50 after OPEC reports rising output. Per CNBC, “Traders said oil markets had come under pressure after Organization of the Petroleum Exporting Countries (OPEC) reported a rise in production, despite the producer cartel having plans, potentially with non-OPEC producer Russia, to cut output in a bid to rein in a global supply overhang.”
The ST technical picture looks shaky after closing below bullish channel in the 4-hour chart, and on the weekly chart, all gains were wiped out this week and it will be a failed breakout unless oil rallies back into Friday.
While stock market today was able to stop the bleeding by closing near flat on the day, it is on shaky grounds especially with technical damage inflicted on SPX and Dow by closing under the previously much documented triangle wedge. The Nasdaq (QQQ), which has been the top performer during the rally off post-Brexit lows, is still clinging onto 50DMA and breakout area. But things maybe turning for the worse, as the Nasdaq futures overnight plunged through bullish trendline off June lows, and support is few and far between until 4760. S&P futures similarly crumbled through its respective bullish trendline.
Upcoming earnings could potentially provide a spark to the market. On Friday, three major banks in Citigroup (C), JP Morgan (JPM) and Wells Fargo (WFC) will be reporting. It appears only more than stellar reports can save the market from further turmoil.
Daily Market Snapshot
Sector ETFs by Daily Return %
| SYMBOL | NAME | CLOSE | DAILY (%) | MTD % | YTD % | |
| IYR | iShares Dow Jones U.S. Real Estate Index Fund | 77.26 |
1.03 1.34% |
-4.19% | 2.90% | |
| XLU | SPDR Select Sector Fund – Utilities | 47.43 |
0.46 0.97% |
-3.18% | 9.59% | |
| XRT | SPDR S&P Retail ETF | 43.68 |
0.33 0.76% |
0.30% | 1.02% | |
| XLP | SPDR Select Sector Fund – Consumer Staples | 52.35 |
0.29 0.56% |
-1.62% | 3.68% | |
| XLY | SPDR Select Sector Fund – Consumer Discretionary | 79.27 |
0.37 0.47% |
-0.96% | 1.42% | |
| XLI | SPDR Select Sector Fund – Industrial | 57.13 |
0.11 0.19% |
-2.14% | 7.77% | |
| XLK | SPDR Select Sector Fund – Technology | 47.49 |
0.08 0.17% |
-0.61% | 10.88% | |
| XLG | Rydex Russell Top 50 ETF | 151.67 |
0.23 0.15% |
-0.72% | 4.90% | |
| SPY | SPDR S&P 500 | 213.71 |
0.28 0.13% |
-1.20% | 4.83% | |
| DIA | Dow Jones Industrial Average ETF | 181.37 |
0.17 0.09% |
-0.77% | 4.30% | |
| XLFS | S&P SmallCap Financials Portfolio | 30.83 |
0.02 0.06% |
1.25% | -0.16% | |
| SMH | HOLDRS Merrill Lynch Semiconductor | 67.97 |
0 0% |
-2.16% | 27.57% | |
| IWM | iShares Russell 2000 | 121.93 |
-0.1 -0.08% |
-1.84% | 8.27% | |
| QQQ | PowerShares QQQ Trust | 117.42 |
-0.1 -0.09% |
-1.10% | 4.97% | |
| XLF | SPDR Select Sector Fund – Financial | 19.52 |
-0.02 -0.10% |
1.14% | 2.42% | |
| KRE | SPDR KBW Regional Banking ETF | 42.83 |
-0.07 -0.16% |
1.32% | 2.17% | |
| XLB | Materials Select Sector SPDR | 46.41 |
-0.09 -0.19% |
-2.81% | 6.89% | |
| XLE | SPDR Select Sector Fund – Energy Select Sector | 70.6 |
-0.3 -0.42% |
-0.01% | 17.04% | |
| XLV | SPDR Select Sector Fund – Health Care | 70.06 |
-0.33 -0.47% |
-2.84% | -2.73% | |
| PFF | iShares S&P US Preferred Stock Fund | 38.71 |
-0.22 -0.57% |
-2% | -0.36% | |
| IBB | iShares Nasdaq Biotechnology | 270.13 |
-6.87 -2.51% |
-6.68% | -20.16% | |
Commodity & Bond ETFs
| SYMBOL | NAME | CLOSE | DAILY (%) | MTD % | YTD % | |
| GDX | Market Vectors TR Gold Miners | 23.07 |
0.49 2.15% |
-12.71% | 68.15% | |
| SLV | iShares Silver Trust | 16.65 |
0.09 0.54% |
-8.52% | 26.23% | |
| GLD | SPDR Gold Trust | 119.74 |
0.19 0.16% |
-4.70% | 18.02% | |
| LQD | iBoxx $ Investment Grade Corporate Bond Fund | 121.89 |
0.16 0.13% |
-1.05% | 6.91% | |
| TLT | iShares Barclays 20 Year Treasury Bond Fund | 132.96 |
0.13 0.10% |
-3.13% | 10.27% | |
| AGG | iShares Barclays Aggregate Bond Fund | 111.4 |
0.04 0.04% |
-0.91% | 3.14% | |
| HYG | iShares iBoxx $ HY Corp Bond Fund | 86.88 |
-0.03 -0.03% |
-0.44% | 7.82% | |
| DBA | PowerShares DB Agriculture Fund | 19.94 |
-0.08 -0.40% |
-0.20% | -3.25% | |
| USO | United States Oil Fund | 11.43 |
-0.15 -1.30% |
4.57% | 3.91% | |
Country ETFs
| SYMBOL | NAME | CLOSE | DAILY (%) | MTD % | YTD % | |
| EWT | iShares MSCI Taiwan Index Fund | 15.73 |
0.17 1.09% |
0.19% | 23.18% | |
| EWA | iShares MSCI Australia Index Fund | 20.73 |
0.14 0.68% |
-0.81% | 9.34% | |
| EWH | iShares MSCI Hong Kong Index Fund | 21.74 |
0.14 0.65% |
-1.23% | 9.69% | |
| DXJ | WisdomTree Japan Total Dividend Fund | 43.91 |
0.21 0.48% |
2.33% | -12.32% | |
| EWC | iShares MSCI Canada Index Fund | 25.27 |
0.05 0.20% |
-1.63% | 17.53% | |
| EWY | iShares MSCI South Korea Index Fund | 56.09 |
0.06 0.11% |
-3.51% | 12.93% | |
| EWU | iShares MSCI United Kingdom Index Fund | 15.2 |
0 0% |
-4.04% | -5.82% | |
| EWM | iShares MSCI Malaysia Index Fund | 8 |
0 0% |
-1.36% | 3.36% | |
| EWP | iShares MSCI Spain Index Fund | 26.18 |
-0.02 -0.08% |
-2.39% | -7.39% | |
| EWN | iShares MSCI Netherlands Index Fund | 24.51 |
-0.02 -0.08% |
-2.19% | 2.81% | |
| FXI | iShares FTSE/Xinhua China 25 Index Fund | 37.83 |
-0.05 -0.13% |
-0.47% | 7.20% | |
| EWJ | iShares MSCI Japan Index Fund | 12.36 |
-0.02 -0.16% |
-1.44% | 1.98% | |
| EEM | iShares MSCI Emerging Index Fund | 37.15 |
-0.07 -0.19% |
-0.80% | 15.41% | |
| EWI | iShares MSCI Italy Index Fund | 10.86 |
-0.03 -0.28% |
-1.45% | -20.96% | |
| EWW | iShares MSCI Mexico Index Fund | 50.48 |
-0.15 -0.30% |
4.13% | 1.30% | |
| EWO | iShares MSCI Austria Index Fund | 16.07 |
-0.05 -0.31% |
-1.53% | 2.68% | |
| EWQ | iShares MSCI France Index Fund | 23.73 |
-0.08 -0.34% |
-1.78% | -1.98% | |
| EWX | SPDR S&P Emerging Markets Small Cap ETF | 42.74 |
-0.15 -0.35% |
-0.97% | 13.34% | |
| EWZ | iShares MSCI Brazil Index Fund | 35.45 |
-0.13 -0.37% |
5.10% | 71.42% | |
| EWL | iShares MSCI Switzerland Index Fund | 29.78 |
-0.12 -0.40% |
-2.52% | -4.06% | |
| EWK | iShares MSCI Belgium Index Fund | 18.41 |
-0.08 -0.43% |
-2.39% | 1.94% | |
| EWG | iShares MSCI Germany Index Fund | 25.78 |
-0.19 -0.73% |
-1.87% | -1.57% | |
| EWS | iShares MSCI Singapore Index Fund | 10.42 |
-0.1 -0.96% |
-4.05% | 1.36% | |
| EWD | iShares MSCI Sweden Index Fund | 28.24 |
-0.33 -1.16% |
-2.86% | -3.22% | |
Days Ahead – Events and Economic Data
10/13 Thursday
| Time | Event / Data |
| 8:30am | Initial Jobless Claims |
| 12:15pm | FOMC Member Harker Speaks |
10/14 Friday
| Time | Event / Data |
| 8:30am | PPI, Retail Sales |
| 10:00am | Michigan Consumer Expectation |
| 1:30pm | Fed Chair Yellen Speaks |
