Major Market ETFs In Stall Speed As Concern Over Europe Lingers; VXX Soars, GDXJ Tanks

[Chart courtesy of MarketWatch.com]

Wall Street closed flat Tuesday despite surging in early trade as worries over Europe overshadowed upbeat US economic reports. The above chart says it all.

The markets turned choppy in the last hour of trading as Dow Jones Newswire reported that former Greek Prime Minister Lucas Papademos has said Greece is preparing to leave the 17-member single-currency union.

US Treasuries tumbled as demand for safe haven assets eased ahead of tomorrow’s meeting of finance ministers in Brussels to discuss Europe’s credit crisis. Also a robust existing home sales reading in April, according to National Association of Realtors sales went up 3.4 percent to an annual rate of 4.62 million, helped boost risk appetite.

The Dow Jones Industrial Average (DJIA) changed little, shedding 2 points, or 0.01 percent, after surging 71 points earlier. Banking stocks remained the day’s top performers.

The S&P 500 Index (SPX) remained near flat, rising about one point, with natural-resources faring the worst among the index’s 10 business group. The NASDAQ Composite Index (COMP) tumbled 8.13 points, or 0.3 percent, to close at 2839.08.

After touching near record-highs last week, the benchmark US 10-year Treasuries retreated for the third consecutive day, its longest streak of down-days in two months.

The yield on 10-year notes rose 0.03 percentage points to 1.78 percent, while the difference between 10-year notes and Treasury Inflation Protected Securities (TIP), a gauge of expected inflation rate during the life of the securities, widened for the third day. 30-year bond yields surged 0.1 percentage point to settle at 2.89 percent.

ETFs in the news:

As markets leaked towards the end, the Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) emerged as one of the top gainers. The CBOE volatility index (VIX) closed up 2.14 percent, despite sinking early on. Other volatility products like the ProShares VIX Short-Term Futures ETF (VIXY) also rallied, finishing 3.44 percent higher.

Among the day’s losers, the Van Eck Market Vectors Junior Gold Miners ETF (GDXJ) remained among the laggards, losing 4.43 percent on the day. As gold futures for June tumbled $22.10, medium and small cap precious metal miners bore the market’s brunt.

As Europe plunged deeper into the crisis, emerging markets, particularly Brazil came in focus Tuesday. A Deutsche Bank report forecasted 2.6 GDP growth in 2012, barely outperforming the US growth rate.

Brazil linked products came under pressure with the iShares MSCI Brazil Index Fund (EWZ) shedding 2.78 percent for the day. The goverment has announced a raft of proposals to boost growth and this ETF will be an interesting watch as the entire world is working on growth propositions.

Trendwise not much changed with our Domestic TTI hovering on the plus side of the trend line by +1.99%, while the International TTI remains stuck on the minus side by -3.41%.

If you are following my Model ETF Portfolios, the latest update will be posted tomorrow morning at 6 AM PST.

Disclosure: No holdings

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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