Wednesday Outlook: Commodities, Global Markets

<< Return to page 1 - Another Light Volume Affair

Holy distraction Batman! Yeah, well we’re going through a lot of crap with Lenovo trying to get our new computer up and running. We now have to return the monitors we purchased recently from Best Buy and spend more money. Also they cancelled the new tower I bought for our programmer two weeks after it was ordered owing to a different delivery address than the credit card. But they never called us even after we authorized the transaction with the bank. My wife’s new laptop is being returned as well. So I’m thinking of that Batman to Robin quote as our son is the one running around Baltimore trying to find the right stuff. An atomic pile might have been easier.

I see this evening that National Semiconductor (NSM) disappointed following Texas Instruments' (TXN) good report last night. Also Intel (INTC) lost market share in the first quarter. That figures since those are in our new non-operating Lenovos.

Okay, tomorrow’s another day.

Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, TLT, TBT, UDN, GLD, DBC, DBA, EFA and EEM.

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

[Rollerball:]

Thank you. Might I suggest a MacPro? Awesome machines, and they run Windows XP (virtually with Parallels or Bootcamp). The speed difference is imperceptible compared to a PC with identical processors.

Jun 10 06:47 AM

[doubleguns:]

Thakns for the charts and comments Dave we really do appreciate them,

Sorry to hear about the computer troubles. Talk about frustration!!!!!

Jun 10 08:20 AM

[karbonkredit:]

Rising interest rates have mortgage applications at rates not seen since last November. Expect IYR to rally today. Dave, get your PC up and running, have just enough time to work bugs out before Win7 is released.

Jun 10 08:24 AM

[David Fry:]

Please, no one else tell me to get a MAC. Our son tells us this as well. Every vendor I use says they won't support us "period" no matter the Windows (or Widows?) setup. What's a fella to do in that regard?

Jun 10 08:36 AM

[TurtleTrader72:]

There is a saying: 'Never short a dull market'.

Althougth I don't believe too much in this low volume bull trend, it is never the less a bull trend so don't fight the tape. When I applied some longer term Fibonacci retracemment studies to the S&P 500, (from the high of 1576 to the low of 666) the first retraecment level (38.2%) posted at 1014. This means that there is a likely hood of it reaching those levels before any significant pull back. There are plenty of reasons to question this up trend but until we get a price movement that confirms a reversal I would not be taking on any new positions (long or short).

Jun 10 08:57 AM

[Seeking Advice:]

Dave, appreciate your continuing to post despite computer frustrations. Hope that your regular posts indicate that the family health issues are for now out of crisis and easing towards resolution. To answer your earlier questions of what types of info to chart/display, I like it pretty basic and mostly follow the basics on your charts and your comments. I don't need the MACD, but do like the McClellan oscillator chart and the addition of the summation index. I'm not a trader, but I do like to have a feel for when the market is overbought or oversold - as I believe you've said, they provide useful info for entry and (sometimes) exit points.

Jun 10 09:12 AM

[speeddaimon:]

David,

If you're looking for a laptop (which it sounds like the case) I would recommend an HP. I've found them to be reliable and their support to be at least adequate most of the time. Dell makes a pretty good system, but their customer service (unless it's changed in the last year) is typically subpar and generally useless. Depending on how much money you're looking to spend there's a few other brands out there, but I would say in terms of what I expect you do on the computer, those two would be the most reasonable. (You could check out alienware.com for some seriously high end laptops)

They were bought by dell to compete with gamers just building their own. They have some really powerful computers that would probably be above and beyond what you're looking for. But, if you threw a light rig in your laptop with maybe a red led glowing skull on the case you'd be baddest technicals geek at the conferences. =)

Jun 10 09:48 AM

[Maxe Paul:]

Thanks for getting us Aussies back into the iShares list David, as for the Chinese, they snuck themselves into Rio Tinto (and anyone else down on their luck), then we blew them off when the shareholders woke from their bear market slumber with a well timed capital raising, or two.....or three!

To celebrate being back in the fold we pushed the ASX
through 4000 today for you David whilst chanting
"AUSSIE AUSSIE AUSSIE, Oi Oi Oi".

Jun 10 10:02 AM

[karbonkredit:]

Wow! I got a thumbs down for making a "tounge in cheek" comment on lack of rationality in the markets? Or expressing my frustration w/Vista?

Jun 10 10:04 AM

[Artistes:]

David:

Thanks for the UNG chart with comments, and also the post last time that one commentor included the Barron's article relating to the oil/gas ratio being at historical highs. Looking at the volume spikes for UNG, and as you alluded to, it appears that lots of folks are putting shares away for a rainy day. Anyone want to speculate what it will take to pin-prick this ratio bubble? Oil going down? Natural gas going up? Or ... Obama, are you listening?

Artistes

Jun 10 10:10 AM

[doubleshortetf:]

I posted the UNG article from Santoli's column from Barron's this week. Here is same post for those interested.

That said, was surprised that UNG did not spike up Mon as often the case with stocks mentioned on Barron's over the weekend.

Got buy order at $13.4 as support is $13.27 per this great free (8 symbols daily) TA site called stockconsultant.com. Been using stockconsultant since 2002 and it's support/resistance calculation is pretty good.

www.stockconsultant.co...


---

THE IDEA THAT NATURAL-GAS PRICES might be bottoming as winter waned, aired here at the end of February, was premature, to say the least.

While the downward thrust has slowed dramatically, the exchange-traded U.S. Natural Gas Fund (UNG), which tracks the commodity, has dropped 15%, from 17 and change at the time, to 14.56 currently, yielding to an oppressive excess of gas in storage and continued weak industrial demand. Yet as most other commodities -- including crude oil -- have sprinted higher in the broader weak-dollar/asset-refl... trade, the relative cheapness of gas has become much more glaring.

The ratio of a barrel of crude to a thousand cubic feet of natural gas last week rose above 18-to-1, a rather elevated level not seen since the 1990-'91 period.

This reflects the way that commodities that travel easily across the globe -- oil, crops, copper -- have been bid up aggressively by investors betting on another go-round of the "gluttonous China" trade, in which free money and fast Asian growth fuels a boom in materials. Natural gas remains a mostly regional good, especially as captured by the traded futures and the ETF.

Bespoke Investment Group points out that each of the three times the oil/gas ratio topped 18 in 1990-'91, it proved a good time to bet on gas relative to crude. Twice, the subsequent outperformance of gas was dramatic, the other time merely impressive. This probably won't go unnoticed too long, which could mean that it makes sense to own UNG outright, or versus a short position in the U.S. Oil Fund (USO).

Jun 10 10:43 AM

[Larrysyr:]

I'm with you, David, on the consumer discretionary sector. Who's buying?

Jun 10 11:32 AM

[DDPearson:]

You asked what people like to see with your charts. I like your comments, the McClellan oscillator chart and the summation index. I like to know when the market is overbought or oversold. If I chose to buy when the markets are overbought, I know my profit potential is limited (at best) and generally a risky play. Buying at the top and selling at the bottom is never a good plan of action. This rally has been tempting to buy into for the last few weeks, but I just shorted the market a few days ago. Will wait and see what happens next. I have been liking the SRS, because I don't see real estate getting better anytime soon.

Jun 10 11:49 AM

[DellRocks:]

Told you Lenovo SUCKS!!!!!!

Jun 10 11:50 AM

[Artistes:]

Doubleshortetf:

Thanks for the info, and good luck with your trade. You got in at a really good price if the supports hold. Given the manufactuing activity in the USA right now, UNG could move sideways for awhile.

Artistes

Jun 10 12:07 PM

[RiskReturnO...:]

Does anyone know of a charting product that can track a pairs trade? I'm trying to identify key divergence / convergences among sectors, and want to avoid having to download the data into Excel and graph it myself.

Specifically, I'm seeing good opportunity to be long XLE, short XLY, but hoping to get some technical guidance from this community ... for example, would a moving average of of XLE-XLY be meaningful?

Jun 10 12:52 PM

[pockyclips ...:]

Is there a 1 yr chart SPY volume chart available in near real time?

Jun 10 12:55 PM

[AndrewBaker:]

With the dollar going to hell in a handbasket, gold, oil, agricultural commodities, base metals and anything BRIC or Australian is going to do well, because no-one wants to hold anything that won't appreciate against the dollar as it falls. It makes sense and I'm doing it.

Jun 10 03:11 PM

[azpatriot:]

I spent 2 years living in Shenzhen, china. I witnessed contaminated milk,lead in toys,contaminated toothpaste, just to name a few.I would never buy a chinese product if I had the option to buy elsewhere.Unfortunately, everything in the USA is made in China!!

Jun 10 05:08 PM