Macro Market · Market Commentary · Newsletter

Daily Commentary – October Chopfest

Another day, another directionless market with major indices still chopping sideways and not able to punch through strong resistance nor support. Indeed, the Dow has now formed doji-like candles where it closed near where it opened 6 out of last 7 trading sessions. On the bearish side, 4 out of last 5 trading sessions tested the 20DMA but was rejected. On the bullish side, it is still holding crucial horizontal breakout support. All in all, jury is still out where we are headed in the medium-term. The bias remains negative as long as the flagship indices are not able to close above broken uptrend.

20161021-INDU.png

While earning reports continue to hit the tape, today’s spotlight was the ECB meeting during which “ECB President Mario Draghi said an extension of the central bank’s bond-purchase program hadn’t been discussed. He also suggested an abrupt ending to bond purchases was unlikely.”

http://www.wsj.com/articles/markets-quiet-ahead-of-ecb-meeting-1476949521

The comment led to Euro’s plunge and in turn US Dollar’s continued ascent north with the DXY index hitting fresh swing highs. The choppiness effect was spilled over to crude oil, as USD strength sparked a sharp selloff in crude oil a day after setting new YTD highs. Elsewhere, gold similarly wiped out yesterday’s gains with the GLD hanging onto the 200DMA. Good news for the bulls is that the MACD has crossed over which should provide more upward momentum in the coming days.

20161021-GLD.png

Back the equity markets, the outperforming sectors on the day were biotechs (IBB) +1% and semiconductors (SMH) +0.9%, a polar opposite to yesterday’s action. Similarly, XRT was unable to follow-through previous day’s bullish engulfing candle, chopped right back under 200DMA, and is hanging by the thread at crucial support zone which we highlighted a couple days ago.

20161021-XRT.png

Taking a look elsewhere, there are a handful of countries which have clear-cut directional markets. Most notably, Brazil (EWZ) has been on a tear, and not even the end of Olympics would stall the momentum. This week, it is on course to recapture the 200WMA and close above a vital swing point from 2015 highs. Technically it would activate a LT buy signal, as we likely head back to top of the channel near 50, more than 30% from current price point. Buy dips at 35.5 – 36.62 on any overbought retracements.

20161021-EWZ.png

Also keep an eye on Japan (DXJ), which is on course of closing above 50WMA however still remains under LT downtrend off Abenomics highs. A close above would also trigger a LT buy signal as well, so it will be on our radar.

20161021-DXJ.png

No major events other than option expiry, and of course, TGIF.

Daily Market Snapshot

Sector ETFs by Daily Return %

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
IBB iShares Nasdaq Biotechnology 270.04  

2.56

0.95%

1.49% -6.71%
SMH HOLDRS Merrill Lynch Semiconductor 67.99  

0.59

0.87%

0.55% -2.13%
XLV SPDR Select Sector Fund – Health Care 70.29  

0.33

0.47%

0.96% -2.52%
KRE SPDR KBW Regional Banking ETF 43.07  

0.12

0.28%

2.55% 1.89%
XLFS S&P SmallCap Financials Portfolio 31.06  

0.05

0.16%

1.07% 2%
PFF iShares S&P US Preferred Stock Fund 39.27  

0.02

0.05%

1.03% -0.58%
XLF SPDR Select Sector Fund – Financial 19.66  

0

0%

1.24% 1.87%
XLP SPDR Select Sector Fund – Consumer Staples 51.95  

-0.03

-0.06%

-0.80% -2.37%
XLU SPDR Select Sector Fund – Utilities 48.28  

-0.03

-0.06%

1.11% -1.45%
XLB Materials Select Sector SPDR 47.08  

-0.04

-0.08%

1.64% -1.40%
XLE SPDR Select Sector Fund – Energy Select Sector 70.65  

-0.08

-0.11%

1.22% 0.06%
QQQ PowerShares QQQ Trust 117.71  

-0.14

-0.12%

0.49% -0.85%
SPY SPDR S&P 500 213.88  

-0.4

-0.19%

0.36% -1.12%
XLY SPDR Select Sector Fund – Consumer Discretionary 78.96  

-0.15

-0.19%

0.09% -1.35%
DIA Dow Jones Industrial Average ETF 181.54  

-0.46

-0.25%

0.14% -0.68%
IWM iShares Russell 2000 121.13  

-0.36

-0.30%

0.58% -2.48%
XLG Rydex Russell Top 50 ETF 151.14  

-0.49

-0.32%

-0.14% -1.07%
IYR iShares Dow Jones U.S. Real Estate Index Fund 78.09  

-0.3

-0.38%

0.85% -3.16%
XLK SPDR Select Sector Fund – Technology 47.4  

-0.22

-0.46%

0.06% -0.80%
XLI SPDR Select Sector Fund – Industrial 57.07  

-0.31

-0.54%

-0.28% -2.24%
XRT SPDR S&P Retail ETF 42.91  

-0.25

-0.58%

-0.49% -1.47%

 

Commodity & Bond ETFs

SYMBOL NAME CLOSE DAILY  (%) WTD % MTD %
TLT iShares Barclays 20 Year Treasury Bond Fund 133.11  

0.14

0.11%

1.16% -3.03%
HYG iShares iBoxx $ HY Corp Bond Fund 87.35  

0.01

0.01%

0.56% 0.10%
LQD iBoxx $ Investment Grade Corporate Bond Fund 122.44  

-0.04

-0.03%

0.67% -0.60%
AGG iShares Barclays Aggregate Bond Fund 111.76  

-0.04

-0.04%

0.35% -0.59%
GDX Market Vectors TR Gold Miners 24.81  

-0.06

-0.24%

7.92% -6.13%
DBA PowerShares DB Agriculture Fund 20.21  

-0.05

-0.25%

0.15% 1.15%
GLD SPDR Gold Trust 120.74  

-0.37

-0.31%

1.16% -3.90%
SLV iShares Silver Trust 16.64  

-0.15

-0.90%

0.48% -8.57%
USO United States Oil Fund 11.43  

-0.23

-1.99%

-0.09% 4.57%

Country ETFs

SYMBOL NAME CLOSE DAILY (%) WTD % MTD %
EWZ iShares MSCI Brazil Index Fund 37.78  

0.51

1.36%

4.80% 12.01%
DXJ WisdomTree Japan Total Dividend Fund 44.44  

0.51

1.15%

1.53% 3.57%
EWP iShares MSCI Spain Index Fund 27.05  

0.25

0.93%

3.32% 0.86%
EWJ iShares MSCI Japan Index Fund 12.57  

0.11

0.88%

1.86% 0.24%
EWO iShares MSCI Austria Index Fund 16.34  

0.06

0.37%

1.74% 0.12%
EWN iShares MSCI Netherlands Index Fund 24.58  

0.07

0.29%

1.15% -1.92%
EWD iShares MSCI Sweden Index Fund 28.48  

0.08

0.28%

0.99% -2.03%
EWI iShares MSCI Italy Index Fund 11.22  

0.03

0.27%

3.22% 1.81%
EWH iShares MSCI Hong Kong Index Fund 21.84  

0.03

0.14%

1.02% -0.77%
EWQ iShares MSCI France Index Fund 24.01  

0.03

0.13%

1.18% -0.62%
EWG iShares MSCI Germany Index Fund 25.94  

0

0%

0.66% -1.26%
EWU iShares MSCI United Kingdom Index Fund 15.23  

-0.02

-0.13%

0.86% -3.85%
FXI iShares FTSE/Xinhua China 25 Index Fund 37.85  

-0.05

-0.13%

0.69% -0.42%
EWX SPDR S&P Emerging Markets Small Cap ETF 43.5  

-0.06

-0.14%

1.75% 0.79%
EEM iShares MSCI Emerging Index Fund 37.61  

-0.11

-0.29%

1.98% 0.43%
EWT iShares MSCI Taiwan Index Fund 15.77  

-0.05

-0.32%

2.01% 0.45%
EWL iShares MSCI Switzerland Index Fund 29.68  

-0.14

-0.47%

-0.13% -2.85%
EWS iShares MSCI Singapore Index Fund 10.46  

-0.05

-0.48%

0.77% -3.68%
EWK iShares MSCI Belgium Index Fund 18.45  

-0.09

-0.49%

0.05% -2.17%
EWM iShares MSCI Malaysia Index Fund 8.03  

-0.04

-0.50%

1.13% -0.99%
EWC iShares MSCI Canada Index Fund 25.74  

-0.18

-0.70%

1.26% 0.19%
EWA iShares MSCI Australia Index Fund 20.85  

-0.21

-1%

0.72% -0.24%
EWY iShares MSCI South Korea Index Fund 56.41  

-0.63

-1.11%

1.90% -2.96%
EWW iShares MSCI Mexico Index Fund 51.76  

-0.6

-1.15%

3.56% 6.77%

 

Day Ahead – Events and Economic Data

10/21 Friday

Time Event / Data
10:15am FOMC Member Tarullo Speaks
12:00pm EU Leaders Summit
12:00pm FOMC Member Williams Speaks

 

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