Thursday Outlook: Commodities, Global Markets 15 comments
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I guess we need to look around the globe and commodity markets for opportunities that exceed those pedestrian issues in the States beyond tech. It doesn’t take much imagination to think what the assembled Chinese officials are thinking when they politely listen to Nancy Pelosi lecturing them about climate change. They’re giggling to themselves thinking, “We own you, so go ahead and continue your little presentation while we buy more iron ore and stuff to beat your sorry ass!”
If you can’t beat ‘em, join ‘em.
Now as to our friend Chauncey Gardiner, I couldn’t resist the two images and the nonsense spewing from both Bernanke and him.
What started off as a Big Wednesday petered out today. There isn’t much left in this week for news, at least from what’s on the calendar. The real action may take place next week with quadruple witching ahead and some real tape-painting hijinks before the month ends.
Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, TLT, TBT, UDN, GLD, DBC, DBA, EFA, EEM, EWZ 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. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
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I remember the equity markets stopped their downward momentum in Apr 08, then July 08, then Nov 08.....could be another smack down coming as the drop in incomes and inflation work their magic
There are plenty of large and small cap opportunities to play this move as well as simply buying long-dated futures contracts. You could play this trend directionally (more aggressive) or use plenty of hedging techniques to at least bet on stability in these prices. I think as a worst case scenario we will have a stable floor for commodities over the next 18 months.
Good recap - appreciate the insight and the charts,
Zach
zachstocks.com
Very quietly, ever so delicately, and without much fanfare, SLX has doubled from the March lows in a straight up move. Like Robert Schiller says, it's "animal spirits" animating the steel stocks. The world is a strange place.
A second question that I find interesting, and you might as well, deals with crossing moving averages. As I am sure you are aware, the 50 day simple moving average (the "SMA") has transcended the 200 day moving average on many international ETFs, particularly EEM and FXI. With extremely broad international equities ETFs, such as GWL and VT, we are close to seeing the 50 SMA cross above the 200 SMA. On the domestic side of things, by contrast, only one or two domestic equities ETFs (QQQQ most notably) have demonstrated a bullish cross over of the 50 SMA and 200 day SMA. We have not seen confirmation on broader based domestic ETFs as of yet.
This gives (or should give) trading types some reason to pause, because either the international ETFs are simply acting as a leading indicator, or, they are setting the groundwork for a sickening trap for the unwary.
I am examining four possible reasons to explain the disparate technical posture of the domestic and some of the international equities markets. Either the domestic equities markets are lagging the higher beta international markets - which suggests further gains ahead - or, more ominously, the international ETFs are showing false positives due simply to (1) their higher volatility, or (2) the declining value of the US dollar, or (3) at long last, the equities markets are decoupling, or (4) some combination of factors (1), (2) and/ or (3).
I plan to write an article on this point in the next few days, but would welcome your insights should you have any, or care to share them. If so, then with your permission, I would like to cite any of your shared insights in my upcoming article.
Many thanks, and as always, thank you for your daily postings.
Just when things look "back to normal" the bear wakes up again!
Thanks again.
Pretty charts and fundamental reasoning mean absolutely nothing when the market keeps going up....I disagree with anyone who would continue putting up chart after chart along with fundamental reasoning to support disbelief in an upward trending market ... mr. Fry's reasoning has continued to support a downturn for the last 35% of this upward move. Obviously Mr. Fry doesn't trade, he writes a column, because if he had any of his own money in the markets with the reasoning he's used the last 2 months, he would have lost a pile.
As with most "experts", Mr. Fry's column continues to point to an inevitable downturn -- so does everyone else at CNBC -- and they can't explain why this market keeps going up.
I too believe the market will eventually turn down, but the prevaililng thought for those who actually trade is that as long as the banks continue to flow tarp money into trading to make money (they sure aren't lending it are they?), and as long as the Fed keeps rates unchanged, the market is going up because of inflation fears..... its fear of the inevitable inflation impact on all goods and services that is driving stock prices upward. After all, you can't just print money and expect it to create value all by itself can you? When inflation hits, and it will, not only will everything cost more, but interest rates will be higher too. It's not a pretty picture, but there are those who are betting the trend will continue higher and making money.
On Jun 11 09:53 AM Alex Trias wrote:
> Thanks, Dave. I view your postings as required reading at this point,
> for their brevity, clarity and breadth. My reaction today is, "All
> petered out" or "the pause that refreshes"? My conundrum when looking
> at your charts is that in many markets, we seem to be seeing a "rising
> wedge" sort of pattern, with support building from the bottom up,
> compressing right around resistance. Some traders might characterize
> these formations as "flags" - with the "pole", as it would be, originating
> as a steep upward sloping run up originating in March, and the "flag"
> being the wedge shaped pattern observed for the better part of the
> last month (particularly in the case of the US equities markets).
> Many traders (although certainly not all), interpret these types
> of trading patterns as auguring a further continuation of the intermediate
> term trend, which has been upward in the case of most equities and
> some commodities. To the extent you give any credence to the "flag"
> or "wedge" patterns followed by some traders, it might be interesting
> to examine how you would discern a "petered out" market from a market
> that is "pausing to refresh". But if you don't buy into the flag/
> wedge stuff, then I could certainly appreciate the lack of need to
> address it in your very useful articles.
>
> A second question that I find interesting, and you might as well,
> deals with crossing moving averages. As I am sure you are aware,
> the 50 day simple moving average (the "SMA") has transcended the
> 200 day moving average on many international ETFs, particularly EEM
> and FXI. With extremely broad international equities ETFs, such as
> GWL and VT, we are close to seeing the 50 SMA cross above the 200
> SMA. On the domestic side of things, by contrast, only one or two
> domestic equities ETFs (QQQQ most notably) have demonstrated a bullish
> cross over of the 50 SMA and 200 day SMA. We have not seen confirmation
> on broader based domestic ETFs as of yet.
>
> This gives (or should give) trading types some reason to pause, because
> either the international ETFs are simply acting as a leading indicator,
> or, they are setting the groundwork for a sickening trap for the
> unwary.
>
> I am examining four possible reasons to explain the disparate technical
> posture of the domestic and some of the international equities markets.
> Either the domestic equities markets are lagging the higher beta
> international markets - which suggests further gains ahead - or,
> more ominously, the international ETFs are showing false positives
> due simply to (1) their higher volatility, or (2) the declining value
> of the US dollar, or (3) at long last, the equities markets are decoupling,
> or (4) some combination of factors (1), (2) and/ or (3).
>
> I plan to write an article on this point in the next few days, but
> would welcome your insights should you have any, or care to share
> them. If so, then with your permission, I would like to cite any
> of your shared insights in my upcoming article.
>
> Many thanks, and as always, thank you for your daily postings.
Good one!
Posted the following comment, last night, on another SA article.
"Since June 1's rush higher that set up the current trading range, intra day price action has cycled down three times to test support. All three times it has failed to break down through it. The strongest re-test of this level actually occurred today, and it was promptly followed by an even more powerful bounce beginning just after 2pm when price action punched back up through an S2 floor level to generate a shift in momentum that lasted for the rest of the day and into the night.
So that's three tests of support followed by three strong bounces. And now, price is making a 4th run up to the top of this trading range to see what may still be there, if anything.
The Daily 50 moving average is steadily trending up. It is certainly worth noting that the Daily 100 moving average has now turned up in recent days for the first time since 2007. Meanwhile, the Daily 15ema certainly appears to be kicking and shoving intra day price action up through all of this higher time frame resistance -- namely the Daily 200sma in proximity to the Weekly 50sma. This is not an easy task, and hence the current trading range. But, the Daily and intra day cycles are aligning now for another potentially even stronger push up to test all of this resistance. So, look for a potential breakout higher to continue this death defying trend upward ... into 'Vertigo' territory.
A couple of Weekly floor resistance levels still lurk around the top this trading range. But if they fail to hold we could see the SP500 nearing 1000 before the week's out. The only thing standing in the way of that might be the Weekly 50sma around 970.
Conversely, a break below 920 will most likely result in a fast move into the mid to upper 800's and eventually much lower."
This would happen if we in California legalized marijuana and then distributed it to the rest of the country. Our 32 billion dollar debt would disappear like snow on Teddy Roosevelt's nose on Mount Rushmore in late spring, and the economy would take off like a Boeing 797.
We wouldn't even have to secede from the union, because we would be kicked out for selling weed.
www.bloomberg.com/apps...