Monday, August 6, 2012

Monday Market Conditions 8/6/12 $SPY $SPX $VIX $VXX

A year after S&P downgraded the U.S. credit rating, the market seems as if it never happened.  Even though the change in non-farm payrolls (NFP) went up, so did overall unemployment.  Knight Capital gets rescued after losing nearly $400 million.  And Mario Draghi created some selling pressure last Thursday by pulling a bait-and-switch.

We keep breaking out to new highs, both Friday and today (albeit on much less volume than Friday).  Not a lot of big macro data coming out this week, except for the weekly unemployment insurance claims on Thursday, so we may continue floating up higher.

Technically, the market ran right up against the upper resistance line today.  OBV actually dropped below the symmetrical triangle.  This run still looks like it's starting to run out of steam, but it can still keep floating higher in the meantime.

The VIX dropped below that critical line at 16, which has preceded volatility spikes in the past.  Definitely a low-risk trade here, but stay away from any volatility derivatives.

The McClellan oscillator has been bouncing around between positive and negative.  As an overbought/oversold indicator, it has been very neutral.  As a momentum indicator, it shows that moves either direction have not been very strong lately.

-The Tech sector finally broke out and is leading the way up again, mostly on the backs of $AAPL & $GOOG.
-Financials battled back a bit but the trend is still down.
-Energy names are still hot, could be readying for another leg up.
-Materials perking up a bit.  Have them bottomed or is this just a bounce?

-The small-cap Russell index continues to make lower highs and give up the headway it made in July.
-Utilities consolidating a bit, but still continue to be a profitable trade.
-Industrials keep pushing lower.
-Transports as a leading indicator tell an ugly story.

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