Thursday Outlook: Commodities, Emerging Markets

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Includes: DBA, DBC, EEM, EFA, EWA, EWZ, FXI, GLD, IFN, JJC, MOO, SLX, USO, XLE
by: David Fry

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Tomorrow features initial unemployment claims and if bulls are still hardened to bad data they’ll spin it to suit them. Also we get the entertainment that the start of quadruple witching can provide.

The thing bears need to acknowledge is that selling may have exhausted itself. In that vacuum are anxious buyers hell bent on trying to prop this market higher into the year end. Following is a DeMark weekly sequential chart from our internal views. The “9” indicates potential selling exhaustion. The result can generally mean [although this may seem obvious] a reaction with sideways action or a reversal in trend. While this didn’t catch the current bottom, it was close enough and now reflects basic sideways movement.

click to enlarge
Click to enlarge

Volume is rather light and money on the sidelines or under mattresses isn’t ready to make an appearance yet judging by negative T-Bill yields. Until investors are willing to take on conventional debt instruments we’re still in a lot of economic trouble. Stocks will only be able to run higher to a limited extent, one would think. They say the market is forward-looking. It seems those in T-Bills see more doom while perhaps stock bulls only see an end of year bonus.

We’re still on the sidelines and waiting patiently to make a move. It doesn’t bother me particularly to be late to new trades, especially with the advent of leveraged ETFs where you can make up ground fast if you’ve judged conditions right.

Gold seems poised to do something but I’ll wait the week out before jumping on board.

Let’s see what happens.

Have a pleasant evening.

Disclaimer: The ETF Digest has no positions.