Tuesday Outlook: Commodities, Emerging Markets

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The week is young but the month is old. October has been lethal to investors. Most technical analysis is nearly dysfunctional as the velocity of the decline is too rapid for most indicators to be effective. It has been routine for the DJIA, for example, to experience 400-500 point intraday swings. That’s why we’re featuring “monthly” charts to give us a better perspective. It’s also why we’re almost 100% in cash.

Now we have the Fed meeting and an obvious interest rate cut. Is this already priced-in? I should think so.

All should be prepared for more - not less - volatility. Things will settle down eventually but when is uncertain. We noted the “possibility” that according to intermediate DeMark Indicators this downtrend could be exhausting itself, if only temporarily, this week. We’ll see.

Have a pleasant day.

Disclaimer: The ETF Digest is long FXY, short FXB and FXC.

Comments

[NOWHEREMAN:]

Nice but a bit too many charts for me to stew on.

The SPY gap will be closed, short covering should do it with a discount cut of 75 not sure whether 50 is already built in.

To me one thing in particular is extremely disquieting, the price of a major benefactor of low basic materials:
DuPont or DD. This stock is trading at 13-14 year lows and the dividend is approaching 6%.

2008 Oct 28 09:20 AM

[Internet2k4:]

To the extent this is about Black Swans smashing into Manhattan, this is indeed reminding me of 9/11, slow motion this time, and I'd start to buy those lows. I would not be surprised to see a Santa trading (sucker) rally commencing soon, carrying through New Year, and revisiting the bargain basement early in the year. I'm nearly out of my doubleshort limbo dance positions - the fun challenge is going low while avoiding that backside flop.

2008 Oct 28 09:46 AM

[dc1:]

Thanks again, David. I really appreciate every chart and comment you put up. Great all around view of what is happening in the market.

2008 Oct 28 10:57 AM

[bbowen7:]

Chucky has to be dead. He is the problem. Economists and professors can align the dots, but the simple reality is that as a country we spend $60 billion per month more than we produce. Lets stop talking about how (government-enhanced) consumer spending will get us through this soft patch back to the good old days.

2008 Oct 28 12:48 PM

[pitaking:]

David, how does today's move effect the Demark indicator?

2008 Oct 28 09:12 PM

[rinkerinves...:]

Based on my current analysis, GDX started an upward trend on October 29, 2008. Note that $24.15 is the target price.

2008 Oct 30 01:52 AM