RSS Updates
Email UpdatesThe SPDRs (NYSE: SPY) is perhaps the most liquid of all ETF products in the world as it tracks the benchmark S&P 500 Index. One of our affiliates has just posed the very important and developing question… Has the S&P 500 peaked? There is even a detailed audio/video presentation here showing this, and his take is that the S&P is nearing a very critical apex, or what we would call a flag or pennant. What we see as the biggest risk to the S&P and stock market overall is that the dollar just cannot fall indefinitely, even if it can still go lower through time.
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Posts for Ticker ‘SPY’
Has the S&P 500 Index Peaked? (SPY)
Is Buffett Becoming A Lagging Indicator? (BRK-A)
Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-A) was out yesterday talking up “enormous progress” that has been made since a year ago. His comments came from an interview and an opening address at the 4th annual closed-door Lydian Roundtable on the Payments Industry, a gathering of senior executives in the payments space. Buffett noted the resiliency of the American system, yet he also cautioned that we are not 100% there just yet when it comes to a return of consumer confidence and spending. Where this gets interesting is that Buffett has been far more timid in 2009 and it is getting hard to not wonder if Buffett is starting to become a lagging economic indicator. His Berkshire Hathaway stock may or may not confirm this notion, but it has underperformed the market since at least the market recovery began.
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Technical Analysis Predictions For Q4 (SPY, UUP, UDN, GLD, TLT, TBT)
Maybe it is time after a 50%+ gain in the major equity indexes, or maybe it is just everyone getting into the October bearish mode. We are hearing more and more calls for a very weak equities market ahead. One of our affiliates just ran a detailed audio/video presentation showing what the charts are expecting for Q4-2009 in the S&P 500, the US Dollar Index, Gold, and even bond yields. Unfortunately this is a bad prediction for stocks and can be tracked directly by the SPDR (NYSE: SPY), or Spyders. This prediction also has some gloom forecast for the US Dollar Index, which can be tracked in the PowerShares DB US Dollar Index Bullish (NYSE: UUP) and in the PowerShares DB US Dollar Index Bearish (NYSE: UDN). That is partly for the call for much higher Gold, which can be tracked most easily in the SPDR Gold Shares (NYSE: GLD). The prediction for bonds was not as finite, but at record lows we can’t really argue with the logic that yields can only go one way unless sideways is considered a directional change.
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The DJIA 10,000 Psyche (AIG, C, DIA, SPY, GLD)
While everyone is stuck talking about the one year anniversary of the Lehman implosion and the real start of the next-to-last big leg down in the financial sector, there is a significant development taking place that is more psychological than anything. The Dow Jones Industrial Average is within 300 points of the 10,000 mark. What is interesting, depending upon how you would calculate the stocks now after a reverse split, is that had American International Group, Inc. (NYSE: AIG) and Citigroup, Inc. (NYSE: C) been left in the DJIA we would already be right at the 10,000 mark. Changing index components can bite both ways.
When The S&P Closes Over 1,000 (SPY)
Everyone has figured out that the Dow Jones Industrial Average is a more difficult yardstick for the overall stock market because its price-weighted rather than market-weighted. But the S&P 500 Index, and therefore the SPDRs (NYSE: SPY), are the market. It was just in June and then again this month that resistance was coming into play at 925 and 950… yet the index is up 19 points today at 994.20 and suddenly we find ourselves within striking distance of the 1,000 mark. Hard to imagine when you consider that the index at the climax of the panic selling was down at the 666 handle.
So here is the question. How high can the S&P go before sellers win? The S&P has now recovered 50% from its absolute lows of March. We have smoothed out all of the trading from February and March to get a more clear picture now that we have escaped the next Great Depression. The index did reach the 832 handles even before the end of March. We are still up over 20% from April 1 on the S&P.
When The NASDAQ Never Drops (QQQQ, SPY)
While a market can go from a mega-bear market to a mega-bull market, steady rises become the usual. But when you see an 11 day consecutive rise and then a gain ‘again’ that would make a twelfth consecutive day rally in an index, this becomes very much out of the norm regardless of what kind of market and economy you are in. That is the case for the NASDAQ, and ditto for the NASDAQ 100 measured by the PowerShares QQQ (NASDAQ: QQQQ) ETF. We have seen a steady rise in the S&P 500 in the same period, but the SPDRs (NYSE: SPY) does not have the exact same number of consecutive winning days. Then there is a chart showing some of the internal readings of late…
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More Triple-Leverage ETF Competition (UPRO, SPXU, FAS, FAZ)
ProShares already has double leverage ETFs for investors and traders alike. It now has launched two new Triple-Leverage ETFs. The UltraPro S&P500 (NYSE: UPRO) is meant to offer 300% of the daily return for the S&P 500 Index. The UltraPro Short S&P500 (NYSE: SPXU) is meant to offer the 300% inverse of the daily return of S&P 500 Index. While these are not exactly the same as Direxion’s Triple-Leverage ETF’s, they are meant as competition to the 20 Triple-Leverage ETFs run by Direxion.
The Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) track the Russell 1000 Financial Services Index rather than the S&P 500 Index. But with the two offsetting funds from Direxion frequently trading 450 million shares combined on many trading days and with the SPDRs (NYSE: SPY) trading over 250 million shares on most days, it is not hard to imagine why ProShares wants to launch these.
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More Reverse Splits, or Just Closure, Possible or Needed in ETFs (FAS, FAZ, UYG, BAC, BHH, ARBA, IIH, AKAM, VRSN, UNG, USO, GLD, SDS, SPY, NYX, NDAQ)
We have been large fans of exchange-traded funds, exchange-traded notes, and other exchange-traded instruments which are open for trade throughout the day that are allowed to be invested in just like a stock. But with all new and growing markets, there are risks that need to be kept in check. There are some leveraged ETF’s and their inverse counterparts which might need to see reverse share splits in the near future. The notion of so many low-priced shares being so active may wreak havoc as the funds managing each ETF try to keep up with appropriate derivatives and in buying and selling shares of the components that are supposed to be the underlying securities. There are even a few ETF’s which should probably just be closed down entirely and liquidated to holders. Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) are both prime examples of ETFs which skew total daily exchange trading volume numbers because of low share prices today and massive trading volume. This is not meant to pick on the fund groups because they created trading vehicles which they did not expect to see some of these moves. There are many more ETFs and ETNs to consider here.
Direxion just announced a reverse split for another ETF yesterday, but not its two financial triple-leverage ETFs. Direxion Daily Financial Bull 3X Shares (NYSE: FAS) is now back down close to $8.00 per share, yet it trades 250 million shares on an average day. The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) is barely above $5.00 and trades more than 200 million shares on an average day. So between the FAS and FAZ, you have an average of more than 450 million shares, and at today’s prices that is close to $3 billion worth of nominal value.
This review discusses a portion of the ETFs and ETNs and the ones under discussion today, along with underlying key companies, are Ultra Financials ProShares (NYSE: UYG), Bank of America Corporation (NYSE: BAC), B2B Internet HOLDRs (AMEX: BHH), Ariba, Inc. (NASDAQ: ARBA), Internet Capital Group (NASDAQ: ICGE), Internet Infrastructure HOLDRs (AMEX: IIH), VeriSign Inc. (NASDAQ: VRSN), Akamai Technologies Inc. (NASDAQ: AKAM), United States Natural Gas (NYSE: UNG), United States Oil (NYSE: USO), SPDR Gold Shares (NYSE: GLD), UltraShort S&P500 ProShares (NYSE: SDS), SPDRs (NYSE: SPY), New York Stock Exchange (NYSE: NYX) and the NASDAQ OMX Group Inc. (NASDAQ: NDAQ).
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Significant Moving Average Tests For DJIA and S&P 500 (DIA, SPY, SDS)
We won’t go as far as to say that the DJIA and the S&P 500 are directly correlated even after the recent rebalance. However, there is one common notion on today’s weakness that has brought up yet another serious chart alert. Both the DJIA and S&P 500 are down and the alerts came up regarding the 50-day and 200-day moving averages. This is being confirmed in both key market ETF’s in the charts of the DIAMONDS Trust (NYSE: DIA) and the SPDRs (NYSE: SPY).
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Will 50-Day Moving Averages Hold Up This Time? (DIA, SPY, QQQQ)
Yesterday’s major rally may have brought on more than just the garden variety panic buying seen in prior panic buying waves. So far we have profit taking being seen early on, but the DJIA and the S&P 500 crossed above their respective 50-Day Moving Averages in yesterday’s move. This is more easy for traders to track in the major ETF’s, so we ran these for the DIAMONDS Trust (NYSE: DIA), SPDRs (NYSE: SPY), and the PowerShares QQQ (NASDAQ: QQQQ).
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DJIA: Don’t Reshuffle Index, Just Cease The Index (GE, MMM, AA, GM, C, BAC, AIG, HON, DIA, SPY)
The Dow Jones industrial average, or DJIA, is perhaps the mostly widely recognized index in the world. When people talk about “The Market” in cabs and in bars, and on the phone, they do not really mean the advance/decline line. They do not mean the S&P 500. They don’t even mean the tech-heavy NASDAQ. They mean the stodgy old DJIA.
There has been much discussion about the Dow now that so many of its members are trading are well under $10.00 (and some challenging $1.00). This may sound like lunacy, but there are many reasons that this long-time market barometer should be killed.
Stock Market Takes Out October Lows (DIA, SPY, QQQQ)
There is a disturbing event happening, and it is one which if gets much worse will take out much of the feeling that the markets have bottomed out. Today the market index readings are challenging the lows from mid-October. Now the challenge comes to whether or not these hold the closing levels and the intra-day lows seen at the time as of 12:53 PM EST today.
S&P500 833.68 (-18.62; -2.18%)
- S&P low close 848.92 (Oct. 27) & intra-day low 839.80 (Oct. 10)
DJIA 8,111.81 (-170.85; -2.06%)
- DJIA low close was 8,175.77 (Oct. 27) & intra-day low was 7,773.71 (Oct. 10)
NASDAQ 1,451.90 (-47.31; -3.16%)
- NASDAQ low close was 1,505.90 (Oct. 27) & intra-day low was 1,493.79 (Oct. 24)
DIAMONDS Trust ETF (NYSE: DIA), SPDRs (AMEX: SPY), and the PowerShares QQQ (NASDAQ: QQQQ) are the main ETFS’s which track these index levels, and all actually trailing in the volume severity sen with many such days.
JON C. OGG
NOVEMBER 13, 2008
FOMC Cuts… One & Done?? (DIA, SPY, QQQQ, TLT)
Today, Bernanke & Co at the FOMC gave us their rate decision. The FOMC has decided to the Fed Funds Rate 0.25% to 2% and the Discount Rate by 0.25% to 2.25%.
As far as we were concerned, the language, tone, and general fed-speak is now more important to us than the actual rate move.
At 1:55 PM EST today, about 20 minutes before Fed-Time, the key ETF’s for the market were as follows:
- DIAMONDS Trust (AMEX: DIA) $129.27 (+1.09; +0.85%)
- SPDRs (AMEX: SPY) $139.55 (+0.47; +0.34%)
- PowerShares QQQ (NASDAQ: QQQQ) $47.73 (+0.13; +0.27%)
- iShares Lehman 20+ Year Treas Bond (NYSE: TLT) $92.56 (+0.11; +0.12%)
We still believe the U.S. is in a recessionary environment despite a positive GDP number this morning, just like Warren Buffett noted this week. The difference is that we now believe the dangers of the systematic implosion and major spreading of counterparty defaults have passed.
Here were some of the FOMC comments and some of our conjecture:
Bracing for Record DJIA Close (DIA, SPY, QQQQ, IWM)
Go back just one-month ago right after all the market malaise. It was a fairly small crowd that would expect the stock market to be back at record highs in only a four to six week period.
Today the DJIA is up 190 points to 14,086.51, more than 80 points above the record close seen over the summer. We are still shy of the intraday DJIA highs of 14,121.04, but this is more than impressive on the back of poor banking news this morning. The DIAMONDS Trust (AMEX:DIA) is also on highs at $140.77, above the prior high of $140.46.
The NASDAQ-100 is also at recent highs, but nowhere near all-time highs. The PowerShares QQQ (NASDAQ:QQQQ) are one of the most liquid instruments out there and these are trading at $51.95 with the prior 52-week high (and well over 5-year highs) at $51.68.
The S&P 500 Index is a different measure and deemed as more representative than the DJIA or the NASDAQ 100. The SPRD’s Trust (AMEX:SPY) are up 1.2% at $154.40, almost 1% under the prior recent highs of $155.53. So there is still another 1% or more of actual resistance before new highs can be claimed across the board on broader markets. The Russell 2000 at 823.12 is also well under the prior highs of 856.46, and its iShares Russell 2000 Index (AMEX:IWM) at $81.93 are also under the $85.74 highs.
So as you can see, the DJIA may be close to new highs, and the NASDAQ 100 may be close to recent highs. But the broader S&P 500 and the even broader Russell 2000 still have some resistance. This is still pretty amazing considering the news tones of four to six weeks ago. Being a contrarian at inflection points can be quite rewarding.
- The VIX is under 17.50, see our "Under 20, Market Fear Is Gone";
- See "Q3 Window Dressing beneficiaries";
- The 50/50 rate cut has some ramifications if the FOMC gets too generous.
Jon C. Ogg
October 1, 2007
ETF Winners & Losers (June 14, 2007)
DJIA 13,553.73; +71.38 (0.53%)….DIAMONDS Trust (DIA) +0.67%
S&P500 1,522.97; +7.30 (0.48%)…SPDRs ‘Spyders’ (SPY) +0.64%
NASDAQ 2,599.41; +17.10 (0.66%)….NASDAQ 100 PowerShares QQQ (QQQQ) +0.66%
10YR-Bond 5.22%; +0.02% ….close ETF iShares Lehman 20+ Year (TLT) -0.25%
NYSE Volume 2,813,638,000
NASDAQ Volume 1,996,214,000
These are not the absolute highest performing ETF’s because some such as the Ultra ETF’s use leverage, but here are the normal unleveraged ET’s that won today:
iShares MSCI Brazil Index (EWZ) +2.76%
iShares FTSE/Xinhua China 25 Index (FXI) +2.58%
PowerShares Dynamic Aggressive Growth (PGZ) +2.47%
iPath S&P GSCI Total Return Index ETN (GSP) +2.37%
iShares Dow Jones US Oil Equipment Index (IEZ) +2.28%
iShares MSCI South Korea Index (EWY) +2.27%
United States Natural Gas (UNG) +2.23%
iShares S&P GSCI Commodity-Indexed Trust (GSG) +2.11%
Claymore/Robeco Developed World Equity (EEW) +2.10%
Oil Services HOLDRs (OIH) +2.10%
iShares MSCI South Africa Index (EZA) +2.09%
As always, even on a second strong up day there were some losers. We back out the ‘inverse fund’ ETF’s and also the leveraged versions of each. Also, the real estate group was the least impressive and we only included a couple variations to prevent repetition. Here are today’s losers:
DJ Wilshire REIT ETF (RWR) (-1.16%)
iShares Cohen & Steers Realty Majors (ICF) (-1.14%)
WisdomTree Japan High-Yielding Equity (DNL) (-0.94%)
KBW Regional Banking ETF (KRE) (-0.78%)
Shares S&P Global Healthcare (IXJ) (0.58%)
iShares MSCI Malaysia Index (EWM) (0.42%)
Jon C. Ogg
June 14, 2007
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