Tuesday Outlook: Commodities, Global Markets

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I believe traders must be on holiday somewhere warm and tropical. Maybe they’re at GITMO? Some, or at least their bosses, might belong there.

It was pretty shocking to hear from subscribers that they couldn’t buy DBA or DBB at Merrill Lynch, or whatever name they’re now going by. This is one of the dumbest things I’ve heard in a long time. Why anyone would maintain an account at a firm so behind the times is beyond me. Not only can’t they provide excellent products to their clients, they can’t take care of their own house.

This is a short week as you know and some earnings will start to roll in. It will be interesting to see how these are spun.

Let’s see what happens.

Disclaimer: Among other issues the ETF Digest maintains positions in SPY, MDY, IWM, QQQQ, IGM, FDN, XLF, XLI, XLY, DBV, DBC, DBA, DBB, DBC, USL, XLE, MOO, EFA, EEM, EWA, EWC, EWZ, EWY and FXI.

The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward.

Comments

[Dr. O:]

Another terrific summary. I noticed you included the BRIC etfs in order towards the end, as well as Asia (EEM, EWY, EWJ) and the commodity dependent countries Australia and Canada (EWA and EWC).

I infer you're long commodity etfs DBA, DBB, DBC, and USL which is agriculture, base metals (think copper), mostly oil, and entirely oil, respectively.

Seems like you're long BRIC without Russia or India (me too!).

Without knowing portfolio weightings, I infer you're long the US market, half of BRIC, commodities, and commodity countries. I like the cut of your jib, but await a pull back to take on additional exposure.

I'm avoiding the US markets. The correlation between markets world wide has been quite high during the bear market, and continues to be so during this period of stabilization. However, the "beta" is better with Brazil, China, Hong Kong, or the Emerging Markets. And, as long as commodities hold up, the fundamentals are much better too, in my opinion.

Apr 07 05:21 AM

[Armin Stuk:]

Regardless, I'm in bullish, buy-and-hold mood !

Apr 07 06:31 AM

[prudentinve...:]

Thanks David. Regarding replacing GM with Apple or Google in the dow, it only matters for the tourists.

I don't see any positive fundamentals. Government has taken over the economy and doing the spending, borrowing, asset allocation, and reward allocation that are normally undertaken by free market forces. They are picking unproductive losers in the financial sector as winners, whilst turning the most productive elements in society into losers, as they will have to pay for the subsidies being heaped upon the incompetents.

With the dire long-term outlook of a new form of centrally-planned crony capitalism , I've taken the recent rally as an opportunity to book some attractive gains, and will book more if the opportunity arises. I expect to be a net buyer again if and when S&P500 drop below 710, which I expect will occur when the markets recover from the shock and awe of Da Boyz, as even the latter may run for cover.

Apr 07 07:45 AM

[Seeking Advice:]

On your EEM chart, you ask "Is the US an EM yet?" To that I say, probably just the opposite. What would be the opposite of an emerging market be... maybe a retreating market (RM)?

Apr 07 08:27 AM

[AndrewBaker:]

Look at the FAS and FAZ charts: big gaps to fill, and with the results season on us, which is not gonna be good, they could be plugged pretty soon. With the warning to not hold overnight, unless brave or foolish, FAZ looks like a double-bagger soon.

Apr 07 10:20 AM

[emarf:]

Thanks Dave- good job as always- still learning this game, but think fas is the way to go- still as you say, the big swings require maybe more tools than I've got-but I'm up from mid 4s and think eventually this is is gonna go crazee- I hate to bail, or go to faz and miss the big runs so I'm sitting with an itchy trigger- any better technical ideas on trading these?

Apr 07 10:39 AM

[G23ROCKS:]

That's ridiculous subscribers couldn’t buy DBA or DBB at Merrill Lynch. Time to switch brokerages!

Apr 07 11:28 AM

[Conan the B...:]

I'm long FAS and plan to add more before next week.

The Banking sector will lead the recovery and it will not matter what the earnings are or the guidance is.

What has been pre-set to matter and will matter, is Tangible Assets. The miniscule change to FASB 157 guarantees that this will be a positive.

Beating a dead horse will not hurt the horse.

Apr 08 12:25 AM

[Jean-Paul R...:]

a declining market! society, empire, economy,civilization.Many books on the subject since the eighties...


On Apr 07 08:27 AM Seeking Advice wrote:

> On your EEM chart, you ask "Is the US an EM yet?" To that I say,
> probably just the opposite. What would be the opposite of an emerging
> market be... maybe a retreating market (seekingalpha.com/symbo...)?

Apr 08 12:43 AM