Tuesday, September 4, 2012

Market Conditions 9/4/12 $SPX $SPY $VIX $VXX

September is here and after a few boring weeks, things could start to pick up in a hurry.  The major spark could come Thursday, when ECB president Draghi may announce more bond buying.  Other than that, the manufacturing sector has contracted for the third month in a row, and oil prices are continuing to creep up.

The bears fought hard today, but in the end could only muster a 1.6-point drop in the S&P 500.  Stochastics have quickly turned around from two weeks ago.  Momentum seems to be slowing, but another 30-point bar could be lurking right around the corner.

After closing in the low 13s a few times in August, volatility has begun to return to the market (good news for option sellers!).  The VIX almost touched 19 at one point today, the highest in nearly a month.

The McClellan Oscillator rebounded into positive territory today for the first time in a few weeks.  Still not much conviction to either side since the quick 100-point run up from June to July.  Still almost 70% of stocks above their 50-day moving averages as well.

-The market is still being led by the tech sector, which is in turn being led by AAPL & GOOG.
-Financials are seeing a bit of buying, probably due to the additional stimulus expected to be announced.
-Energy names are forming a rounded top.
-After being bought up slightly, the Material sector is starting the next leg down.

-Somewhat reassuring to see the small caps also moving with the larger market.
-Utilities possibly seeing some selling due to risk-on trading.
-Industrials getting hammered on today's ISM data.
-Not good when Transports lag the rest of the indexes.

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