Today was like watching paint dry. Around 1 pm it got somewhat interesting as the VIX index rose for about an hour and then left as investors were willing to sit quietly by and wait for the jobs report tomorrow morning. The bad weather warnings are already in the headlines relative to the February jobs report. Wow… talk about needing to smooth over the data. Whatever the outcome it promises to be interesting. The retail sales report for February is being blamed on the weather as well. What the hell, let’s all take a week off because of the weather.
What are we watching today in follow up to our report on Tipping, Topping or Trending from last night?
Short Treasury bond ETF (TBT) bounced above $70 today as interest rates rose for the third day. The yield on the 30 year bond is now at 3.68% up 13 basis point the last three trading days. Double bottom is set up on the ETF and the yield chart. This is a tipping point for the long bond and worth watching for the follow through as this pans out.
Emerging markets (EEM) gapped higher and through the initial resistance today. The $40.15 mark and 200 DMA are the next hurdle for the sector. A stronger dollar and rising rates is helping the outlook for the global markets overall. The break through this level of resistance would put the sector in a position of establishing a up trending sector.
Gold was up 0.8% on the day and continued to push higher after breaking the downtrend line in play off the August high. Cleared the 200 DMA and now dealing with $1353 on the price of gold. As we stated last night the trend is in play and a break through this level of resistance opens the way for the sector to move back to the August high or a target of $1424 going forward.
Oil sold early to test support and then moved slowly higher throughout the balance of the day to close at $101.90 up 0.4%. A follow through on the upside would offer a trade in the commodity short term. UCO is the leverage ETF to trade crude or OIL is the leveraged. Our target remains $110 for crude near term. The test didn’t stock the sector from continuing the trend higher.
EAFE index (EFA) broke above the $67.30 resistance that has been in play for four plus months. Europe was part of the catalyst to the fund as IEV broke to new high on the day as well. The ECB left rates alone and the optimism talk about the turn around in European economy is helping push the move higher. The sector remains in trend up.
The questions pertaining to fundamentals mattering is still in play. My answer remains the same, they don’t matter until they matter. For now no one likes what they are seeing, but it hasn’t stopped anyone from buying or at least allowing the buyers to control the trend. This looks and acts like a bubble blowing market environment to me. The Fed is the reason for the bubble machine, but Fed President Mr. Fisher even acknowledged today that the market is in a bubble. That is the pot calling the kettle black. The Fed provided the stimulus and the market took advantage of it, but now the market is blowing bubbles. It is an ugly cycle of blame and it doesn’t really matter… only the ability to protect our principle and stay focused on what we can control… our portfolio.