Riding The Seesaw: ETF Bulletin

Today marked yet another day of riding on the seesaw, as global markets continued their seesawing motion between fear of death and death itself.
Today the markets decided to land on the “fear of death” side, as markets swung higher, marking another end to another fall during this crazy week on the playground.

This wild ride on the seesaw by investors worldwide indicates one element of today’s markets: investors are scared and have nowhere to run and nowhere to hide.

Wall Street Sector Selector remains in the defensive mode, still expecting lower prices ahead.

The Economic View From 35,000 Feet:
The market swung higher today based on a less than 400,000 jobless claims report while it seems that the EU is now the fiscal house that cannot get its fiscal house in order.

“AA+” US grass (T-Bonds) must taste good to the herd of investors, especially when it appears that the “AAA” grass of European Countries have not been good enough to stop the herd from stampeding across the Atlantic. It must be the growing noxious weeds of Greece, Spain, Portugal, Italy, and a possible French downgrade. Tough day on the playground for Europe.

Gold also petered out at less than $1800 per ounce, ending its three day surge as a safe haven while the Swiss Franc also took a dive today as the “safe haven” looked less appealing, at least for today. Interestingly enough, gas is cheaper at the pump as well.

And for better or worse, the new, improved Congressional “Super-Committee” was completed today, filled out with politicians on both sides of the aisle with the same views as before, poised to fight over the same subject over and over again come November. I do wonder how productive these rounds of talks will be this time.

As this week comes to a close, be careful what side of the seesaw you are riding on.

Technical Analysis:
From a technical standpoint, the indicators look ominous. Looking at the chart of the S&P 500, you can see that the 50 Day Moving Average is about to cross the 200 Day Moving Average and so is about to form the “death cross,” the widely watched and statistically validated indicator of the potential for a new bear market and lower prices ahead.

Chart Courtesy of StockCharts.com.

Global Market Summary:

Dow Jones Industrials (DIA): +423.27; 3.95%

S&P 500 (SPY): +51.88; +4.63%

NASDAQ (QQQ) +111.63; +4.69%

Russell 2000 (IWM): +35.68; +5.64%

Tomorrow’s Action:
Tomorrow is filled with more economic indicators:

The August Consumer Sentiment Reports come out, the all important indicator of US consumer health. Also, July Retail Sales Reports will be published, further indicating retail consumer health. And lastly, June Inventories reports, another important indicator of the economy.

I do wonder how they will read.

Do seesaws come with seatbelts?

Have a great evening,

John

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Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.

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