Tuesday Outlook: Commodities, Global Markets

<< Return to page 1 - Complacency and Light Volume Push Markets Higher


























































I’m giving my new computer its first workout. And things are going okay despite delays with installations of various programs. All in all, things seem fast and right. Now if I can only get these markets figured out everything will be perfect.

The current bought of light volume reflects a lack of conviction. We express that with high cash levels running between 70-80%. What positions we take are small reflecting a lack of confidence in markets overall despite some healthy advances overall. The biggest fear is a protracted trading range throughout the summer until we get to the meat of things in the fall. This is how things seem to be playing-out. But, then Mr. Market has his own schedule and my sense of things is as faulty as anyone else's.

There’s plenty more to rock markets the rest of this week from tomorrow’s store sales, PPI, Redbook and industrial production. Then Thursday is keyed by jobless claims, Philly Fed, another Treasury auction and Friday’s quad witching. It will be entertaining if nothing else.

Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, XLE, XLU, GLD, DBC, USL, DBA, DBB, EFA, EEM, EWA, 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.

Comments

[Seeking Advice:]

Dave,
Always enjoyt the chaets and the short term oversold probably means an up day Tuesday (or Wednesday) I suppose.

There was no apparent "stick save" at the end of the day, which has been unusual on down days, recently. I wonder if there's signifcance to that. I'd cut equities (long) to a little above 40% a few months ago which drifted down to about 34% as the market drifted to the March lows. Now, with the rally, I find my portfolio at between 42 and 43%. But, I wonder whether the games "da boyz" play is coming to an end, meaning less propping, no more stick saves, and maybe a return to reality - you know that place where real economic data drives market action. If that's arrived, maybe I should be taking my % equities back down a bit. Watching and waiting for a sign, I suppose.

Jun 16 08:11 AM

[Alex Trias:]

I'd chalk yesterday up to one of two different scenarios. First scenario goes like this. Several equities markets have fallen back close into the range of their 200 day simple moving averages. Similarly, the SP500 observed the key level of 923 as support. In the context of a short term bear market rally, you'd expect the 200 day averages to act as resistance. In the recent past, these areas failed to act as resistance, and thus, traders are staking out these points as support. Yesterday also could have marked a classic "shake out the week hand" - something you'd normally expect when markets are coiling up and preparing for another move higher. On the fundamental side, the economy may be better than anyone knows at this point. Why? The system is flooded with cheap

Scenario number two. Bear markets are vile hunters. They operate to lure in the unsuspecting. They bounce up, striking various promising areas of technical support or resistance, investors pile in, filled with hope, and just as price momentum peters out, volume falls off to a mere trickle, the bear pounces.

Jun 16 09:17 AM

[Maxe Paul:]

We have been quite subdued in Australia ever since China accused Rio Tinto of "behaving like a dishonourable women", to think we, China's mistress, would act like that?

Damn it if they dont like the high class escort rates we charge in Australia maybe they should downgrade to Eastern European extraction or Africa maybe!

Jun 16 09:33 AM

[AndrewBaker:]

The one bright spot, at the moment seems to be natural gas: not surprising, given the 18:1 price differential with oil when 6:1 is nearer the historic ratio. The weak dollar will support commodities, including precious metals and oil, so as this latter won't drop; then natural gas has to go up. Plus it's a green fuel as seen by many, so Obama and other green advocates will champion it. Buy now while it's still cheap: I have.

Jun 16 11:39 AM

[ur2smrt4me:]

Thanks for the COW chart & comments. Livestock can't be stored and it's got unique risks not shared by other commodities. I thought it would be a good contrarian move to buy into the swine flu panic selloff. On second thought I should have bought HOGS instead.

Jun 17 12:00 AM

[med:]

thanks a lot

Jun 17 12:31 AM

[Crude Oil T...:]

It's not a matter of if we are correcting now, but how much.

Check out this video from Adam Hewison on his take on the direction of the market > "S&P 500 - A Correction or a Major Turn"? > tinyurl.com/kt3y7e

Jun 17 10:02 AM