U.S. Index ETFs Defy Gravity

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U.S. Index ETFs And Stocks Move Higher, Defy Gravity

U.S. stock indexes and index ETFs put in a strong showing on Friday and for the week, moving higher in spite of mixed economic reports and overbought technical indicators

On My ETF Radar

spx020312 U.S. Index ETFs Defy Gravity

chart courtesy of StockCharts.com

In the chart of the S&P 500 (NYSEARCA:SPY) above, we can see how RSI has returned to overbought levels above 70 which is where it has been for the last two weeks.  Momentum is slowing as represented by MACD, but the trend remains strongly positive on a near term basis.

Economic reports were mixed last week and we’re coming into the worst month of the year during post Presidential election years.  Seasonality, along with the upcoming “Fiscal Cliff 2″ debate, will likely put more headwind into the  U.S. financial scene.  Furthermore, Q4 GDP came in negative last week and if this estimate is confirmed, will cast an even longer shadow over the economic and financial landscape going forward.

Read “February Worst  Month Of Post Election Years”

ETF News You Can Really Use

Last week was the fifth straight week in the green for U.S. stock indexes and ETFs and the Dow Jones Industrial Average (NYSEARCA:DIA) closed above 14,000 for the first time since October, 2007.  The Dow Jones Industrial Average’s  (NYSEARCA:DIA) all time closing high is 14, 164, also set in October, 2007, just 1.1% from Friday’s closing level.

Economic news indicated mostly positive data with January Non Farm Payrolls coming in at 157,000 new jobs but missing expectations even as November’s and December’s reports were revised sharply upward.  January ISM beat expectations with a print of 53.1, solidly in expansion territory, and the Markit U.S. PMI report also came in better than expected with a 55.8 reading, indicating stronger economic growth.  Finally, the University of Michigan consumer sentiment index posted a better than expected 73.8 Read “Five Economic Reports Bring Good News”

Overall unemployment for January rose to 7.9%.

For the week, the S&P 500 (NYSEARCA:SPY) gained 0.7%, the Dow Jones Industrial Average (NYSEARCA:DIA) rose 1.1% and the Nasdaq Composite (NYSEARCA:QQQ) climbed 0.9%.

VIX, the CBOE S&P 500 Volatility Index, also known as the “fear index,” fell sharply on Friday with a 9.66% drop to close at 12.90, far below its historical average of 20, as the index lost a significant portion of its recent rally.  VIX ETFs also were significant movers on Friday:

iPath S&P 500 Short Term VIX Futures: (NYSEARCA:VXX) -5.14%

VelocityShares Daily 2X VIX Short Term ETN (NYSEARCA:TVIX) -8.24%

Earnings season is more than half over and earnings reports have beaten expectations with almost 3/4 of reporting companies issuing better than expected reports.

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