Tuesday Outlook: Commodities, Emerging Markets

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It was a light volume day and with it indexes can get pushed around relatively easily. You can see that clearly with the action today in the 5 minute SPY chart above. You should expect more such two-way action throughout the next two shortened weeks.

ProShares and Rydex issued their holiday tax gifts today proving only one thing: there’s no free lunch. If you’re a tax-exempt investor protecting your portfolios with inverse or leveraged inverse issues you were unaffected. But, taxable investors got the tax bill today. As you may know, if you had tried to protect yourself in futures or options you would’ve received a similar bill. If you had sold your stocks, you would have another tax bill to pay if you had a low cost basis and sold them well. It’s a bitter pill to some since these tax liabilities are mostly short-term gains. But you know something? It’s a lot better having a tax bill than losing 40-50% on your investments, plus there are few ways to beat Uncle Sam without some high-priced tax accountants and lawyers.

I’ll post again tomorrow and that should be it for this week… er, maybe.

Let’s see what happens.

Have a pleasant evening.

Disclaimer: The ETF Digest is long among other issues: FXF, GLD, EWJ, EWY and FXI.

Comments

[patio:]

Merry Christmas and Happy New Year.
Thank you David for the combination of real data mixed with insightful humor- we need both.

2008 Dec 23 07:49 AM

[fatcat:]

Why are the double short etfs getting killed today???

2008 Dec 23 10:17 AM

[David Fry:]

cap gains tax pass through.

2008 Dec 23 10:32 AM

[John Lounsbury:]

Merry Christmas, David.

Thanks for saving me on chart look-up time every day.

2008 Dec 23 12:10 PM

[Emerald:]

Well done, Dave!

2008 Dec 23 12:43 PM

[OldLimey:]

Thanks for your efforts - today and throughout the year.

I note your CHF call, and can't argue with the market. However, it'll be interesting to see how long the move lasts. The SNB is exceptionally sensitive to the EURCHF rate for obvious trade reasons (so USD-based investors need to keep a close eye on EURUSD as well); intervention in EURCHF is quite likely if CHF stays strong. Another consideration is that the SNB has explicitly stated that it's going to get onto the QE bandwagon; surprising, but I guess the fundamentals for the Swiss economy do look pretty horrible going forward - at least, by their normal standards!.

2008 Dec 23 02:53 PM

[adAstra:]

Definitely seconded.

Thanks so much for the charts and commentary David, and Merry Xmas.

2008 Dec 23 09:53 PM

[David Fry:]

Thanks everyone! Happy Holidays!

2008 Dec 26 04:59 PM