Business Magazine

ETF Periscope: Between a Rock of Gibraltar and a Hard Currency Place

Posted on the 06 June 2011 by Phil's Stock World @philstockworld

Courtesy of Daniel Sckolnik, ETF Periscope

Between a Rock of Gibraltar and a Hard Currency Place

by Daniel Sckolnik of ETF Periscope

“I used to jog but the ice cubes kept falling out of my glass.” -- David Lee Roth

ETF Periscope:  Between a Rock of Gibraltar and a Hard Currency Place
Careful what you say. The markets are pretty sensitive right about now.

Unlike the majority of 2011, when the markets primarily shrugged off bad news with a casual sort of indifference, there now appears to be some cracks appearing in the confidence of investors. The past week’s relatively poor economic news threw the Bull hard to the floor, and it remains to be seen exactly how fast it can rise.

If you haven’t been paying attention, you might like to know that several key indexes fell for the fifth straight week.

For the week, the Dow Jones Industrial Average (DJAI) lost 2.3%, at one point testing 12,100 for support before edging up slightly to close at 12,151. The S&P 500 Index (SPX) fared the same, also down 2.3% and ending at 1,300. The previous level of support that was considered a significant technical marker, 1,333, was convincingly breached on Wednesday and may now prove to serve as a formidable level of resistance. The Nasdaq Composite Index (NASDAQ) joined the smack-down party, also dropping 2.3% on the week.

Back in March, following the Japan tragedy, the equity market blinked, yet quickly regained its composure in a staggeringly fast fashion, taking a mere two weeks to regain its lost ground. That the Dow could make up a 600-point deficit in so short a time, in spite of the numerous questions that lingered as to the global impact of the disaster, was certainly a testament to the faith, misguided or not, on the part of investors world-wide. 

This past week saw the Dow shed over 400 points in just three days, and the apparent trigger was nowhere nearly as catastrophic.

True, the European Union’s debt crisis has been slamming into the ears of investors for the last several weeks, on a scale not heard since last year’s wave of media noise concerning the PIIGS (Portugal, Ireland Italy, Greece, and Spain) saturated the financial sections of newspapers and blogs. But really, that particular danger has remained lurking all the while, hidden in plain view.

Also true, Friday’s Labor Department report seemed to catch economists off guard, which really is nothing new. Still, 54,000 new jobs created in a county the size of the U.S. can hardly be considered robust. And the unemployment rate rose, rather than fell. A 9.1% unemployment rate at this point in the “recovery” seems a bit high. However, it’s not much of a surprise to anyone who has been actually out in the real world, where significant moans of lack can be heard by just about anyone who is listening.

Apparently, economists don’t get to visit the real world that frequently. Who could blame them? Nobody likes a sad face.

So what is going on here? Is this newfound sensitivity to actual data by the markets possibly becoming the new trend? Is this “shaky” market the result of investors actually bringing their attention to “bear” on fundamentals, or is something else going on?

It is an extremely reactive market right now. It’s a skittish market, perhaps due to concerns that the termination of QE2 by the Fed might actually have an impact on the economy. Or perhaps it’s because the U.S. government is playing footsy with itself over the prospect of having to raise the debt ceiling, even though any sensible group of legislators would be loath to embrace the prospect of facing a lowered national credit rating, global financial meltdown, that sort of thing.  How comforting for all, that sense always trumps politics in Washington.

But I digress.

The nervousness is, for whatever reason, there to be seen, as evidenced by last week on Wall Street when the downward ride from Wednesday right through Friday seemed to indicate that bargain shoppers of stocks are yet to be convinced that what they are seeing are really bargains at all.

At least not yet.

Perhaps the prices of stocks will look more attractive in the coming week if and when the bottom proves to have not fallen out. If this shift of perception occurs, then last week’s 2.3% drop across a broad slab of indexes may yet be regarded as a minor, albeit necessary, correction. In any event, fear feeds on fear, and it may be as good a time as any to bone up on your hedging skills, just in case the slight case of skittishness turns into a full-blown case of the jitters.

ETF Periscope

Full disclosure:  The author does not personally hold any of the ETFs mentioned in this week’s “What the Periscope Sees.”

Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.

Post to Twitter
Tweet This Post

You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • A New Way to Shop for the Most Unique Sunglasses

    Shop Most Unique Sunglasses

    These unique sunglasses represent smart style for women's fashion and are only available for a limited time. This startup has made a line of luxury sustainable... Read more

    9 hours, 50 minutes ago by   Meghashop
  • Who Are the Members of Diet Doctor?

    Members Diet Doctor?

    Who are you? We asked our members and received 1,100 replies: Most members are women, and more specifically middle-aged women. This is a group of people that... Read more

    10 hours, 7 minutes ago by   Dietdoctor
  • Self-Transcendence 3100 Mile Race 2017 – Daily Updates – Day 8 – Alan Young

    Self-Transcendence 3100 Mile Race 2017 Daily Updates Alan Young

    A cool calm (wind wise) start to the day. Usual start up work completed but we lose our Manager of the Drinks Food table. Tomorrow it will be Yuri Trostenyuk an... Read more

    10 hours, 48 minutes ago by   Abichal
  • Beautiful Destination Wedding with Pastel Colors | Gemma & Sean

    Beautiful Destination Wedding with Pastel Colors Gemma Sean

    Chic Stylish Weddings Chic Stylish Weddings - The destination wedding we are sharing today is so beautiful; from the pastel colored flowers used for the... Read more

    11 hours, 54 minutes ago by   Eleni Balkouli
  • The Humor Writing Business

    Making people laugh is no laughing matter. Someone should have told me this before I...oh, wait, a lot of people did but, as usual, I never take advice that run... Read more

    14 hours, 1 minute ago by   C. Suresh
  • Baptism of My Babies. All of Them.

    Baptism Babies. Them.

    Today was so emotionally intense for me. Three of our seven children were baptized at the church Matt and I met in and got married in. Each one has been... Read more

    14 hours, 14 minutes ago by   Rachel Rachelhagg
  • Asparagus and Courgette Rice

    Asparagus Courgette Rice

    I wanted to cook us something quick and light today . . . fresh, and healthy. I remembered seeing this recipe in the June issue of Food to Love and I had... Read more

    14 hours, 16 minutes ago by   Mariealicerayner