Market Recap - Down but not Out??

Yes the market closed in the red today after taking the lead from Asia and Europe overnight. The Dow closed down 250 points or 2.1%, but well off the intraday low that had the index off by 340 points. The S&P 500 (-1.8%) and NASDAQ (-1.7%) fared slightly better, but overall it was an ugly day for stocks.

WHY?? - I am not going to get into why stocks were down. I covered there reasons in an earlier blog post if you want to know my thoughts.

DOLLAR & COMMODITIES - The US Dollar Index ETF ($UUP) was up 0.2% on the day as its currency counterparts fell along with commodities across the board. A strong US Dollar is historically negative for commodities and that was evident today with Gold ($GLD) down 2.4%, Copper ($JJC) losing 2.9%, and Oil ($USO) off by 0.5%. The US Dollar Index hit a new 6-week high today as Gold hit a new 1-month low. There is definitely a correlation between the two asset classes. Short-term this may continue, however long-term I want to be long Gold and at a minimum flat the US Dollar.

SOCIAL MEDIA ETF HIT HARD - The shares of newly introduced Global X Social Media ETF ($SOCL) took a dive today, losing 5.2% after several of its holdings fell due to Chinese rumors/reports. Muddy Waters Research firm went after $FMCN today (-40%) as it has a number of Chinese ADRs. I have yet to determine if this firm is actually right on or simply a scam to take down companies they are short. Only time will tell. Anyway, it hurt other Chinese internet ADRs that make up the portfolio of $SOCL. Shares of Sina ($SINA), a top three holding of $SOCL was down 11% and Renren ($RENN), another holding fell 8.6%. I love the social media angle, but I would not run out and buy $SOCL today. There is too much risk, with not enough upside reward in the short-term.

DRUGS ON A DAY LIKE THIS - One of the very few bright spots today was the iShares US Pharmaceutical ETF ($IHE) with a gain of 0.75%, easily beating its peers. The iShares Utilities ETF ($XLU) lost 1.3%, also beating the overall market.



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