Friday Outlook: Commodities, Emerging Markets

<< Return to page 1 - Bear Market Bounce















































That’s all I have time for today. Let’s give the bulls a hand! This type of day has been building and clearly the troops were lined up beneath the DJIA 8K mark ready to pounce.

From my perspective it must be pointed-out that we’ve had these big moves repeatedly throughout this massive move lower. This is a 'trust but verify' market. As impressive as today was, what really has changed? Not too much. Earnings, economic conditions and consumer sentiment still reflect terrible news with nothing on the horizon indicating any change. Nevertheless the DeMark indicator outlined exists in most markets which can signal a reversal among other things.

Tomorrow (Friday) we get Retail Sales and more consumer sentiment data. If market players are still feeling jiggy, then they’ll ignore and rationalize what should be bad news.

This weekend begins the G-20 meeting. A lot of rumors are circulating regarding potential outcomes including currency revaluations. The US position is weak and some may try to shove some bad medicine down this administration’s throat before a new one begins. That probably is the reason something like that won’t happen.

Greg Newton and I will conduct our podcast on Friday after the close which is free to non-subscribers after noon on Sundays. Oh, and did I mention, we’re [cough] really good!

Have a pleasant weekend.

Disclaimer: The ETF Digest is long TBT and short TLT.

Comments

[bosun.j:]

Happy to see your at least grudging acknowledgment of he part PPT is playing.

2008 Nov 14 02:37 AM

[fjpenney:]

It's easy to look at the middle of a chart a make commentary about support, resistance and trends. It's much more difficult to provide commentary when you look at the right edge of the chart. This is about as good as it gets when it comes to technical analysis. David definitely has a good handle on what is happening and acknowledges that he doesn't know what is going to happen next. I appreciate that kind of commentary over that which comes from over-confident analysts.

FJP

2008 Nov 14 04:35 AM

[ezrasfund:]

SPY moved in a 10.5% range yesterday.

EEM moved in a 17% range yesterday.

Could anything be a sign of greater uncertainty in the markets?

These values are about as certain as the values of CDOs and CDSs, and about as likely to fall off the cliff again.

If you were leveraged 20 to 1 (like our banker friends) you would have gone from rich to insolvent and back again in one afternoon.

Ask how is it possible?

Go back and look at a few normal decades. The only example is the black swan of Oct 1987 until you get to the great depression.

Lots of money made timing the bounce in 1932 and here's your chance again. Or is this more like 1930? Still a leg down to go?

2008 Nov 14 09:32 AM

[NOWHEREMAN:]

The crash of 1987 was a Program Trading snafu or FUBAR. The ten year weekly chart of the S&P 1969 to 1979 is virtually identical to the ongoing chart 1999 to present.

In fact, most of the action within the previous is almost identical to the current: Nifty Fifty Stock Bubble, Viet Nam and protests, Oil spike, Gold unleashed, Housing Boom/Bust, inflationary Financial Crisis, Nixon's resignation.

We have faster worldwide dissemination of news and deflation is the bugaboo vs inflation. History via Chart is being repeated.

You can shove whatever else you wish on the economic front into either period but Chartwise, well I'm really sorry, you can not change that to suit your needs.

2008 Nov 14 02:02 PM

[Winston Smi...:]

Hey paultaut: I just laid both charts over one another for the time period you suggest....they don't look anything alike. What are you talking about?

2008 Nov 14 04:11 PM

[NOWHEREMAN:]

I never said to superimpose them on each other, I said that they were virtually identical. As graphs, you can lay them side by side or one below the other.

Mr. Fry has shown you multiple graphs of differing sectors with timeframes which are 6 months, some 5 yrs, others inbetween. try superimposing them on each other. The peaks will be all over the place, the end result is virtually the same so far.

The Peak to Nadir times are different, If you gave me two graphs and told me to superimpose on each other with the end result that they were identical, I would tell you that they were two graphs of the same index over the same timeframe and that you were trying to play a joke on me.

The EAFE index looks to have peaked in Oct. of 07 while Brazil took til about June of 08 before dropping.

All my excuses aside, I meant to use 1967 to 1977 which included Nifty Fifty Bubble and subsequent bear, the new 1970-71 bull and the 1973-74 bear. The first ended 18 months later, the second two years later. The second dropped faster and further. The speed and steepness of the 73-74 Bear has the closest resemblance to what is currently in progress. The slide took about a year to go down rather slowly but in 1974, it was a falling knife for most of the year, the drop ended about 15% lower.

I blew it. I apologize for giving the wrong coordinates and not explaining that I was focusing on the 1974 drop itself.

2008 Nov 15 01:37 AM

[a believer:]

These graphs indicate one thing strongly: Investors no longer trust financial data because it is now so opaque (with so many CDOs, CDS and derivative WMDs - and no honest accounting), thus investors know stock and commodities values need to be different, but noone knows how much lower or higher.

Keep your assets in cash, unless you are a successful day trader.

2008 Nov 15 01:08 PM

[a believer:]

...and because debt has suddenly imploded, the U.S. has quickly gone from a 'rich' country to a poor one, in which most people can afford only the necessities of life (or less) and young people must continue to live with their parents.

This is happening in our family and many families I know.

We have turned away from the love letter God wrote to us in His Holy Word, the Bible, we continue to allow the murder of millions of our unborn, we put our trust in political officials and our wealth, we allow same sex unions and marriages...

And we expect to be blessed with wealth as a nation? Who do we think we are kidding?

2008 Nov 15 01:25 PM