Wednesday Outlook: Commodities, Global Markets

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A quiet day but HPQ reported less than expected results tonight and it will be interesting to see how that is spun. Bulls will try to find another piece of news to trump and ignore it.

It’s interesting that now the Fed is ready to back up municipal bond issues through a joint venture by creating another bond insurance company with the National League of Cities. Why stop when you’re already half way down the river?

S&P PEs are now at 122.45 based on reported trailing earnings. The financial media likes to report operating earnings versus those based on GAAP (Generally Accepted Accounting Principles). If you used S&P’s own projection for 2010 of $35, then PEs are only (gulp) at 24.75. Hardly “cheap” as you so often hear in the financial media.

In a final note, how about seeing a story about SEC attorneys being investigated for insider trading? That’s a doozie!

Let’s see what happens.

Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, TLT, TBT, UDN, DBV, DBC, and UNG.

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. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.

Comments

[harammph:]

can I interpret both USL and DBA as having mini-H&S bottoms?

May 19 10:59 PM

[Robert J C:]

Dear David,

I enjoy your articles very much. Please could you include EEB in future ?

RJC - Singapore.

May 20 02:47 AM

[fatcat:]

I believe you are seeing commercial RE paper firming because of the expectation that a rescue will come for that sector.

Makes sense....gov doesn't want to have all their work on the banks and insurers undone by another crisis.

God help us...where will this all end.....

May 20 04:46 AM

[Macro_Man:]

S&P's numbers for 2010 are that low? I guess I was looking at bottom's up analyst numbers compiled by S&P then...which as we all know has been super optimistic. Is there a public source where I can see those S&P numbers.

What is your read on TLT. Does it break lower or higher? If a big break out happens on the downside, what is the support?

Long bonds are extremely unpopular. Don't know anyone other than me who likes TLT....but I am waiting. Dont want to get crushed by the momentum. But am a big buyer in October 2009!

May 20 07:01 AM

[thiazole:]

Until the housing inventory starts shrinking faster, I wouldn't want to see housing starts picking up - you are just adding more houses to the inventory. How would that be bullish? The most bullish thing that can happen now is more buying than building, and increasing building is going to make that prospect harder to come by.

May 20 09:45 AM

[Bill40:]

Hopefully I and many, many others will achieve your clarity in view someday. That part about politicians having to wear clothes like race car drivers is great. The problem is their clothing won't give enough square footage. Maybe a digital billboard on their chests that changes from "Teachers' Unions" to "Too-Big-To-Fail Banks" to "Investment Banks" to "Freddie Mac".

May 20 11:25 AM

[thiazole:]

Don't forget UAW - dumping money into sinking ships just so the UAW members (that played one of the biggest roles in sinking the ships in first place) still have jobs is one of the worst abuses I've seen during this recession.


On May 20 11:25 AM Bill40 wrote:

> Hopefully I and many, many others will achieve your clarity in view
> someday. That part about politicians having to wear clothes like
> race car drivers is great. The problem is their clothing won't give
> enough square footage. Maybe a digital billboard on their chests
> that changes from "Teachers' Unions" to "Too-Big-To-Fail Banks" to
> "Investment Banks" to "Freddie Mac".

May 20 11:49 AM

[henarl:]

Really like your idea on the logos. Maybe we could add a couple of scarlet letters too, like S for stupid or C for crook or L for loser.

May 20 12:59 PM

[David Fry:]

I think it could be an SNL skit with the sponsor patches.

May 20 01:16 PM

[David Van K...:]

"S&P PEs are now at 122.45 based on reported trailing earnings." What's the source of that number? I haven't seen anything near to that anywhere else. Morningstar has S&P P/E at 16.7.

Thanks.

May 20 03:14 PM

[thiazole:]

Either way, as I've mentioned before tinyurl.com/qc72lk, index P/E ratios don't really make any sense in a recession (as long as some companies are losing money, the whole index valuation is thrown off).


On May 20 03:14 PM David Van Knapp wrote:

> "S&amp;P PEs are now at 122.45 based on reported trailing earnings."
> What's the source of that number? I haven't seen anything near to
> that anywhere else. Morningstar has S&amp;P P/E at 16.7.
>
> Thanks.

May 20 05:10 PM

[Maya_:]

The 10 year spy volume data is most interesting. Compare the volumes during this bear with those on the prior one - volume is high, very high this time round. It looks like there has been a generational shift in wealth; possibly from older folks to those younger. I do not think capitulation of this level has ever been evident since the 70's. Maybe, just maybe the buyers are now ready to hold long term. More money chasing reluctant sellers might mean more upside. I would like to see volume return to less surreal levels in a long term context - the VIX has now returned to a more sensible level in the long term basis maybe much lower volumes will soon follow.

May 21 02:43 AM