US Equities Bounce Back From Worst Week Of The Year

[Chart courtesy of MarketWatch.com]

US stocks bounced back Monday to break the weeklong losing streak as broader markets rallied, despite social-networking site Facebook plummeting more than 10 percent following its Friday debut.

The S&P 500 snapped its six straight day of losses to post its best session in two months while the Dow made the biggest single-day gain in over a month. Sentiments improved amid optimism that a solution to the ongoing sovereign debt crisis will be found soon. Hmm, I think we have been down that road before.

Treasury 10-year yields dropped to near record lows as German and French finance ministers met to discuss strategies to minimize the possible Greek-exit impact.

The Dow Jones Industrial Average (DJIA) jumped 135.10 points, breaking its streak of six consecutive down days.

The S&P 500 Index (SPX) climbed 20.77 points with natural-resources and technology advancing the most among the index’s 10 sectors while the NASDAQ Composite Index (COMP) zoomed 2.5 percent, its biggest single-session gain this year.

The 30-year bond yields dropped to the lowest since December as the Federal Reserve purchased $1.8 billion in longer maturity Treasuries; 10-year Treasury yield rose 1 basis point to 1.73 percent. The spread between 30-year and 10-year maturity notes narrowed to the least since January as concerns over inflation eased.

ETFS in the news:

Though precious metals ticked slightly lower today, mining stocks like Newmont Mining and Barrick Gold jumped more than 3 percent. Quite understandably mining-linked ETFs also progressed with the Van Eck Market Vectors Gold Miners (GDX) settling among the day’s top gainers. GDX ended the day 3.34 percent higher, while silver-miners related fund Global X Silver Miners ETF (SIL) jumped 3.23 percent.

Among the day’s top losers, the Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX) topped the charts, sinking 11 percent for the day as risk sentiments improved. The CBOE volatility index slumped 12.31 percent as all the three major indexes bounced back strongly amid hopes of an early European settlement. However, VXX inherently remains a risky product and you better avoid it unless you can withstand large swings.

Natural gas futures based funds like the United States Natural Gas Fund (UNG) as NG prices ease following last week’s rise. UNG tumbled 3.40 percent while other NG futures based products like the United States 12 Month Natural Gas Fund (UNL) lost 2.78 percent for the day.

The position of our Domestic Trend Trackign Index (TTI) improved slightly to +2.11%, while its international cousin remains mired in bear market territory at -3.82%.

I mentioned Friday that our VTI holding was scheduled to be sold today (as it had triggered its trailing sell stop point), unless we saw a strong rebound. Well, the rebound ensued, and I held on to VTI for the time being. It will be now interesting to see if the G8 jawboning produces any results (I doubt it) helping the markets higher, of if this was simply a one-day dead cat bounce.

About Ulli Niemann

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