By Dave Fry
Bulls spent the better part of Thursday reconsidering Janet Yellen’s testimony. Two issues stood out Wednesday during the Fed chairwoman’s news conference. The first issue investors felt was bearish, when Yellen stated QE might be over by the fall, implying to some that interest rates could rise at that time. But that was a misinterpretation of her statement. What was positive is that now even the Fed understands that the 6.5% unemployment rate target is no longer an accurate guide to labor market conditions. Beneath that top-line data point are more negative labor conditions including the worrisome high level of part-time jobs, the long-term unemployed and the under-employment level or U-6. Taking the latter into consideration makes Yellen’s comments more dovish, which bulls spun as her dominant thinking.
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It seems every new Fed chair has their media trials when first dealing with language and body language. No doubt she has her focus group helping her with talking points keeping her on the appropriate narrative.
Dave Fry
Economic data Thursday was mixed with strength in the Philly Fed Survey (9.0 vs 3.0 expected & prior -6.3) and Leading Indicators (0.5% vs 0.3 expected & prior 0.1%), meaning no weather issues here. Existing Home Sales fell slightly (4.6 M vs 4.6 M expected & prior 4.62 M), meaning pundits could blame weather issues there. Thursday stocks opened lower but investors quickly found their sea legs and dip buyers returned to markets. The Fed was active with another round of POMO bond buying ($2.626 billion), which was supportive to bulls. Leading sectors higher Thursday : Financials /quotes/zigman/246222/delayed/quotes/nls/xlf XLF +1.58% , Banks /quotes/zigman/478226/delayed/quotes/nls/kbe KBE +1.91% , Regional Banks /quotes/zigman/478050/delayed/quotes/nls/kre KRE +2.04% , Semiconductors /quotes/zigman/621351/delayed/quotes/nls/soxx SOXX +1.85% , Software /quotes/zigman/288025/delayed/quotes/nls/igv IGV +0.61% , Telecom /quotes/zigman/260920/delayed/quotes/nls/iyz IYZ +1.63% , Brazil /quotes/zigman/264176/delayed/quotes/nls/ewz EWZ +2.34% , Mexico /quotes/zigman/260604/delayed/quotes/nls/eww EWW +1.79% , Turkey /quotes/zigman/505768/delayed/quotes/nls/tur TUR +1.28% and India /quotes/zigman/1512813/delayed/quotes/nls/epi EPI +0.79% . Leading sectors lower Thursday : Homebuilders /quotes/zigman/1496092/delayed/quotes/nls/itb ITB -1.64% , Biotech /quotes/zigman/477927/delayed/quotes/nls/xbi XBI -1.23% , Solar /quotes/zigman/8748213/delayed/quotes/nls/tan TAN -1.96% , Japan /quotes/zigman/260387/delayed/quotes/nls/ewj EWJ -1.44% , Hong Kong /quotes/zigman/260342/delayed/quotes/nls/ewh EWH -1.24% ,China /quotes/zigman/478423/delayed/quotes/nls/gxc GXC -0.46% , South Korea /quotes/zigman/22227/delayed/quotes/nls/ewy EWY -0.73% , Taiwan /quotes/zigman/22355/delayed/quotes/nls/ewt EWT -0.64% , Indonesia
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/quotes/zigman/625848/delayed/quotes/nls/idx IDX -2.48% , EAFE /quotes/zigman/289988/delayed/quotes/nls/efa EFA -0.38% , Silver /quotes/zigman/417006/delayed/quotes/nls/slv SLV -1.36% , Agriculture /quotes/zigman/448143/delayed/quotes/nls/dba DBA -1.92% , Natural Gas /quotes/zigman/8909134/delayed/quotes/nls/ung UNG -1.74% and Metals & Mining /quotes/zigman/477947/delayed/quotes/nls/xme XME -0.43% . China stocks have entered a bear market as of last night. The world’s second-largest economy in a bear market can’t be ignored — or can it? We saw Japan in a bear market in the 1990’s while U.S. markets cruised to new highs, so anything is possible. We posted a short video of the SPDR Select Financial ETF (XLF) from a daily chart view. The chart of the day included Van Eck Russian ETF , which fell sharply on additional sanctions, particularly to oligarch friends of Putin. On the weekly chart below, you’ll note the high (HI) indicator dated the week of November 1, 2013, which indicated a good top. A low (LO) indicator appears on the chart the week ending February 28, 2014. The latter would mean a move out of the short position at the open of the following week near where markets are today. Perhaps with more sanctions and a further decline a new short may be desirable, but the market is very oversold even with recent rallies.
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The top 20 market movers by percentage change in volume whether rising or falling is available daily. Volume was light and breadth per the WSJ was mixed to positive. Money flow noted below in second chart series remains weak.
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U.S. sector ETFs & bond markets
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/quotes/zigman/246222/delayed/quotes/nls/xlf
Select Sector SPDR-Financial
US : U.S.: NYSE Arca Volume: 89.12M March 20, 2014 4:00p
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/quotes/zigman/478226/delayed/quotes/nls/kbe
US : U.S.: NYSE Arca Volume: 1.96M March 20, 2014 4:00p
/quotes/zigman/478050/delayed/quotes/nls/kre
SPDR S&P Regional Banking ETF
US : U.S.: NYSE Arca Volume: 6.03M March 20, 2014 4:00p
/quotes/zigman/621351/delayed/quotes/nls/soxx
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iShares PHLX Semiconductor ETF
US : U.S.: Nasdaq Volume: 176,910 March 20, 2014 3:59p
/quotes/zigman/288025/delayed/quotes/nls/igv
iShares North American Tech-Software ETF
US : U.S.: NYSE Arca Volume: 30,230 March 20, 2014 3:59p
/quotes/zigman/260920/delayed/quotes/nls/iyz
iShares U.S. Telecommunications ETF
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US : U.S.: NYSE Arca Volume: 375,368 March 20, 2014 4:00p
/quotes/zigman/264176/delayed/quotes/nls/ewz
iShares MSCI Brazil Capped ETF
US : U.S.: NYSE Arca Volume: 27.41M March 20, 2014 4:00p
/quotes/zigman/260604/delayed/quotes/nls/eww
iShares MSCI Mexico Capped ETF
US : U.S.: NYSE Arca
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Volume: 3.71M March 20, 2014 4:00p
/quotes/zigman/505768/delayed/quotes/nls/tur
US : U.S.: NYSE Arca Volume: 230,754 March 20, 2014 4:00p
/quotes/zigman/1512813/delayed/quotes/nls/epi
WisdomTree India Earnings Fund
US : U.S.: NYSE Arca Volume: 2.54M March 20, 2014 4:00p
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/quotes/zigman/1496092/delayed/quotes/nls/itb
iShares U.S. Home Construction ETF
US : U.S.: NYSE Arca Volume: 6.36M March 20, 2014 4:00p
/quotes/zigman/477927/delayed/quotes/nls/xbi
US : U.S.: NYSE Arca Volume: 395,167 March 20, 2014 4:00p
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/quotes/zigman/8748213/delayed/quotes/nls/tan
US : U.S.: NYSE Arca Volume: 776,268 March 20, 2014 4:00p
/quotes/zigman/260387/delayed/quotes/nls/ewj
US : U.S.: NYSE Arca Volume: 64.37M March 20, 2014 4:00p
/quotes/zigman/260342/delayed/quotes/nls/ewh
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iShares MSCI Hong Kong ETF
US : U.S.: NYSE Arca Volume: 3.22M March 20, 2014 4:00p
/quotes/zigman/478423/delayed/quotes/nls/gxc
US : U.S.: NYSE Arca Volume: 71,385 March 20, 2014 3:59p
/quotes/zigman/22227/delayed/quotes/nls/ewy
iShares MSCI South Korea Capped ETF
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US : U.S.: NYSE Arca Volume: 2.70M March 20, 2014 4:00p
/quotes/zigman/22355/delayed/quotes/nls/ewt
US : U.S.: NYSE Arca Volume: 6.68M March 20, 2014 4:00p
/quotes/zigman/625848/delayed/quotes/nls/idx
Market Vectors Indonesia Index ETF
US : U.S.: NYSE Arca Volume: 431,017
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March 20, 2014 4:00p
/quotes/zigman/289988/delayed/quotes/nls/efa
US : U.S.: NYSE Arca Volume: 18.49M March 20, 2014 4:00p
/quotes/zigman/417006/delayed/quotes/nls/slv
US : U.S.: NYSE Arca Volume: 8.47M March 20, 2014 4:00p
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/quotes/zigman/448143/delayed/quotes/nls/dba
PowerShares DB Agriculture Fund
US : U.S.: NYSE Arca Volume: 1.34M March 20, 2014 4:00p
/quotes/zigman/8909134/delayed/quotes/nls/ung
United States Natural Gas Fund L.P.
US : U.S.: NYSE Arca Volume: 10.00M March 20, 2014 4:00p
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/quotes/zigman/477947/delayed/quotes/nls/xme
SPDR S&P Metals & Mining ETF
US : U.S.: NYSE Arca Volume: 1.95M March 20, 2014 4:00p
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