ETF Expert

Here in the last full trading week of August, the markets may finally be getting tired. Consider the following:

(1) Intra-day selloffs. The mainstream media keep pressing on about new 10-month highs. Yet these are the closing highs only. Both Monday 8/24 and Tuesday 8/25 witnessed the S&P 500 spike above 1035, before the barometer settled 1% lower than at the intra-day peaks. 

(2) Hot headlines. You couldn’t ask for more upbeat headlines in the news. Bernanke is reappointed. Housing prices rose between Q1 and Q2. Consumer sentiment was much higher than anticipated. 2-year treasury auctions went off swimmingly. And yet, the markets still faded badly at the finish.

(3) High volume buying in no-growth companies. While there may not be a bubble in the traditional sense, the ongoing intrigue for “horrific” companies has bubble-like momentum. The only reason to buy Citigroup, Fannie Mae, Freddie Mac or AIG is the perceived “understanding” that these companies don’t have to be profitable… the U.S. government owns and supports them.

Here is the 15-minute interval movement for the S&P 500 SPDR Trust (SPY) over the last 2 trading sessions. In essence, if we fail at a 3rd attempt to close above the 1035 level, a correction would appear to be in the September works.

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Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.

Tags | "etf august 2009", "etf correction", "etf pullback", "etf selloff"