Monday, April 07, 2008

Tracking a Flight From Safety

Clawing Back? - After a harrowing decline from 40 down to 16 during 2007, the Homebuilders ETF (XHB) failed to make new lows when the major averages hit new lows in March. Since their lows, the group has risen 50% and is making new year-to-date highs.

Buying Surge - If today holds up, it will represent the 16th day out of the last 19 in which the Adjusted NYSE TICK has been positive on the day. What that means is that, across the broad universe of NYSE stocks, large traders are dominantly lifting offers rather than hitting bids. A similar pattern holds true for the Dow TICK (TIKI) as well. The chart from my recent indicator review clearly shows the consistent pattern of buying.

Flight From Safety - Two-year Treasury notes, which captured well investors' flight to safety, dropped to a yield below 1.3% in March and now, with quite a drop today in bonds, are pushing a 2% yield. It's not difficult to surmise that the money that had found safe haven in Treasuries are being put to work in stocks, given the dynamics of the TICK noted above. Financial issues, so far today, have once again led the upside.