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Market Notes: It's a Risk Asset Party and Everyone's Invited! Except Gold.


The market is rocking on NFP day. Here's what the Buzz & Banter team is watching.

The market is reacting very well to the big bad NFP report.

Or is the big good NFP report?

I follow about 25 ETFs and other funds as a broad market risk monitor, and at the top of the heap today is:

GSV Capital (GSVC) +2.6%
Guggenheim China Technology (CQQQ) +2.2%
Social Media (SOCL) +2.1%
Biotech (IBB) 1.9%

As an aside, I don't trade CQQQ because of a lack of volume (trades about 23K shares per day), but it is useful for analyzing risk appetites.

But talk about your risk-on...

Alibaba (BABA) options began trading recently. Is it just me or do implied volatility reading in the low-30% range seem too low? I don't expect GoPro (GPRO)-like insanity... but still. Earnings time may be straddle time!

Speaking of GoPro, it's rebounding quite nicely on its announcement that it's making a huge merchandising push with Best Buy (BBY). The bears keep talking about competition from other sports cams possibly hurting GoPro, but they are out of their minds. Every GoPro competitor sees a hot market opportunity, crams some chips and optics into a plastic casing... and flops before flying into the bargain bin. If GoPro hits the wall, it will be because of market saturation, not competition.

And oh yeah -- remember Citron Research may be lurking with a bearish report, so keep your eyes and ears peeled.

Elsewhere, retail and housing are rocking, financials are strong, and the Russell 2000 is about in-line with the S&P. Remember, the Russell outperformed huge yesterday, up 1% vs. flat for the S&P.

Check the chart for a relative performance comparison for today and yesterday. (Russell is bar chart, SPX is purple line)

The Russell dropped 11.1% peak-to-trough off the July 1 high at 1213.55, so at least for the past couple days, the bulls are getting payback.

Since we're on the topic of small cap relative performance, I'll toss in this chart from a longer-term study I worked on recently.

Click to enlarge

Since 1989, small caps have generally outperformed in uptrends -- with the exception of the late 1990's, when big tech and blue chips were all the rage:

NASDAQ is showing very slight outperformance, which is impressive given that index heavyweight Apple (AAPL) is basically flat. As a quick update to my recent long trade in the stock -- I'll be closing that out today win, lose, or draw. I'll hold onto my long-term position.

The dollar is rocking and commodities... are not. Gold is particularly weak and the miners are getting smashed up. John LaForge from Ned Davis Research recently said gold could hit $660. I'm not yet dabbling in gold from the long or short sides, but it's worth asking, could sentiment get any worse?

My Russia and Portugal ETFs are only taking minor hits today, which feels like a bit of a victory.

For the duration of the day, I'll be watching the usual suspects, the Russell 2000, Biotech, social media, etc. for possible changes in character.

Stay strong!

Twitter: @MichaelComeau

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Position in AAPL,Russia,Portugal
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