Thursday Outlook: Commodities, Emerging Markets

<< Return to page 1 - Bye Bye Uncle Buck























































The bond rally is historical in dimension. It amazes me each day and there’s little explanation for current levels beyond the obvious. Negatively, it should be a harbinger of very bad economic times ahead. Positively, interest rates are low but for whom? The fixed-income asset class restrictions placed by large institutions on their advisors limits them to Treasurys. It seems that simple.

Waving goodbye to Uncle Buck is a disappointment since I was going to buy a flat in Paris, a farm in Provence, a villa in Tuscany and a ski lodge in Staad. Oh well, maybe in another lifetime.

Tomorrow begins quadruple witching that ends Friday. I expect this to be eventful since recent heavy action within markets creates opportunities for options chaos for those on the wrong side of the most recent trends. Floor traders and others will be seeking out strike prices like heat seeking missiles. Just get out of their way is the best policy.

Although the market fell some today, the action wasn’t all bad. You have to take your hat off to bulls, able to shrug off the worst news from GS and MS the past two days, and bid those stocks strongly higher. You must click your heels together three times and repeat: “Forward-looking, it can’t get any worse, forward-looking, it can’t get any worse, forward-looking, it can’t get any worse.”

We’re taking our time putting on positions since there have been many dead cat bounces higher like these during 2008. I really believe January will tell the tale, but that’s my intuitive self speaking. And that part of me is fickle.

Have a pleasant evening.

Disclaimer: The ETF Digest is long GLD, FXE and FXI.

Comments

[David Fry:]

Okay, okay.....Gstaad vs Staad. It just shows I've never been there but, hey, I know people who have.......just sayin'. Crammer spelling is deliberate. There, that should do it.

2008 Dec 18 08:42 AM

[investor88:]

Good to see David beginning to give credit to the bulls in action. Action and what you see is what ultimately matters on the bottom line of the portfolio. If you analyse the action and the charts since the Dow bounced up 20% from 7.5k, we have give the score to the bulls.

The moving average patterns [sp500 crossed 50 sma], the slope of the 20d, 50d sma suggest a bullish pattern. Then you have the Fed throwing money at the market plus zero rates, auto rescue, obama usd 800bn stimulus, world stimulus.

The long term picture is open to debate and still a bear trend but now we may be in a fairly robust bear rally that may last for a month or two. Las Vegas sands has doubled, so has Citi etc. Traders may wish to participate.

I doubt the Dow can surpass the down sloping 200d sma at about 10.5k in 2 months time. Then it will be time to sell when confronted with the dismal reality that all that has been done may not be enough?

2008 Dec 18 09:07 AM