Tuesday Outlook: Commodities, Global Markets

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You can’t make this stuff up sometimes. Da Boyz on Wall Street own the markets and always have, but it’s never been this over-the-top and outrageous. It’s enough to shine light on this nonsense and see it for what it is—blatant market manipulation with taxpayer money. You won’t see much in the way of investigations because the powers that be are in the hood.

Now let’s move to earnings. July will feature a steady stream to please (spun as “better than expected”) and disappoint (just ignore those please).

The week’s young and so is the month. Let’s see how it plays out.

Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, RWX, BWX, WIP, DBC, USL, DBB, EWA, 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

[Dr. O:]

Wake me when this depression-like recession is really over. Wake me when the destruction of asset value in equities, commodities, and real estate is really over. Until then, I'm in cash or equivalents except for a trade. Only thing I wonder about is what currency(s) to hold.

Jul 07 06:13 AM

[Moon Kil Woong:]

Apparently, they only trust HAL to buy up the market at the end of the day. I guess a few hundred billion dollars doesn't go as far as it used to these days. Just ask AIG and Citibank.

Jul 07 06:26 AM

[SeeTheLight:]

Seven more bank failures last week, GS automated trading program stolen ... allegedly, Biden says Obama administration misread the economy, the list goes on and on. And yet some how we are holding technically to the neckline on the HS pattern on the S&P 500 and mirrored on many other charts you posted.

Smart money is apparently getting defensive (and as always manipulative) and the retail investors are apparently rushing in still to catch the rally that they missed thinking that they can get in on the recent dip. Does anyone see any strength here? I don't. The downside risk seems palpable and the upside potential muted to me. Looks very reminiscent of a bull trap here. Of course the powers that be always seem to push for one more last gasp so I am placing my bets all over this market roulette table.

I suspect everyone is waiting for earnings to signal the direction and I wonder if "better than expected" will no longer be good enough. My intuition favors the affirmative as the rally was based on an expectation that the recovery would be V-shaped and not L-shaped.

Good Luck all.

Jul 07 07:27 AM

[manya05:]

Dr. O, if you figure out what currency to hold, let me know, the Forex market is as f**ed-up as the stock market, I have been paying attention, going in and out of different currencies just to stay even. If you sit on a single currency right now you are likely going to be creamed, you need to move around. What a mess.

Jul 07 07:44 AM

[dcb:]

letter to white house, senate and house banking committee's
This is from the financial times 7/6/09. Front page. "Banks reinvent securitisation..."

Goldman is working on a scheme that would reduce the capital held against the assets.
"Goldman's idea, it would sell an insurance product to a bank with a toxic portfolio". "the insurance would require far less capital to be carried against it than the original assets.

Isn't this what got us into this whole mess in the first place. American's want real solutions not a set up for this to happen again and the bankers to collect billions ruining the economy once more. This sounds a lot like AIG. Haven't their misdeeds cost us enough. We'd rather wait for a real recovery that have to do this again anytime soon. Please stop the bankers from ruining anymore lives.

Jul 07 07:45 AM

[BigJake:]

If HAL is trading the market up, why not buy folks?

Jul 07 08:34 AM

[Dr. O:]

If I had to own one currency, it would be the Chinese Yuan. Number two the Aussie. Number three the Swiss Franc. However, exchange rates are controlled by governments to promote "stability" and economic agendas.

Jul 07 08:47 AM

[predictorma...:]

I should have sold in May and gone away, if only to avoid the total boredom found in following any segment of the investing world.

If this goes on Mr Fry is going to be able to automate his whole column, including the comments.

Jul 07 08:59 AM

[daniel3582:]

On Jul 07 08:34 AM BigJake wrote:

> If HAL is trading the market up, why not buy folks?

Why? Because it looks like HAL is trading the market down, at least for the time being...

Jul 07 09:04 AM

[robert.b.fe...:]

I'm just holding dollars not because it's "better" but because it's handy. I would agree we are in "bull shooter" territory. Be very carefull here if you are a buy to hold investor or a trader there is plenty of misery comming for all to share. Especialy if CTFC puts limits in place and the knee cap our trade tax initiative passes the senate.

Jul 07 09:14 AM

[Seeking Advice:]

The concerns I see being articulated here and elsewhere is that the small time investors will get crushed if the apparent market manipulations (the "buy programs" of the really big players) stop and the market falls back 15% or 20%. But with few people I know interested in buying at this point (they're wary, shell shocked, or just confused), I don't think individual 401k investors have been jumping in. The light volume I think indicates it's mostly the big players buying and selling to each other. Those with 401k's in target date retirement funds probably could be the most exposed though, if this scenario comes to pass.

Jul 07 09:23 AM

[Daniel Herkes:]

There are good reasons to postulate and question whether the markets are being manipulated by the BIG traders. For example, Tyler Durden had an interesting piece about GS possibly front running the market using their clients own keystrokes as they enter trades on GS's website Read GS's response to that article and draw your own conclusions:

www.zerohedge.com/arti...

As always the truth seems stranger than fiction. Thank you to Mr. Fry and Seeking Alpha for a glimpse of the truth. Without law, tyranny prevails.

Jul 07 09:27 AM

[David Fry:]

When Robert Rubin was at GS he was famous for allowing his trading desks to trade against his client's positions for the first time. Remember, they were/are prime brokers and have custody of many hedge fund assets.

Smart hedge fund operators then moved trades and custody to multiple organizations to avoid this crap.

So who do you trust? Thank God for the blogosphere!

Jul 07 09:51 AM

[robert.b.fe...:]

My bad that's CFTC


On Jul 07 09:14 AM robert.b.ferguson wrote:

> I'm just holding dollars not because it's "better" but because it's
> handy. I would agree we are in "bull shooter" territory. Be very
> carefull here if you are a buy to hold investor or a trader there
> is plenty of misery comming for all to share. Especialy if CTFC puts
> limits in place and the knee cap our trade tax initiative passes
> the senate.

Jul 07 10:08 AM

[White Shield:]

Perfectly summarized in the "DBC" comments.
And your "oil" comment (USL) was rhetorical I assume?
cute.

Jul 07 10:43 AM

[White Shield:]

GOOD POINT!!!
Ignore the "jump in" mindset...tread cautiously (long, as you stated) and limit the exposure to theft. As hard as it is to defy the nature of investment, prudence in keeping it heavily liquid will win out.


On Jul 07 09:14 AM robert.b.ferguson wrote:

> I'm just holding dollars not because it's "better" but because it's
> handy. I would agree we are in "bull shooter" territory. Be very
> carefull here if you are a buy to hold investor or a trader there
> is plenty of misery comming for all to share. Especialy if CTFC puts
> limits in place and the knee cap our trade tax initiative passes
> the senate.

Jul 07 10:48 AM

[AndrewBaker:]

Running out of ways to say that the markets are being rigged ... and using our money to do it too!

The manipulation shows so well in the charts. How do you trade in such a situation? Cash is getting ever more attractive right now, even with near zero interest rates. Anything else can swing against you, up or down, for no fathomable sensible reason.

Jul 07 12:45 PM

[bmcon:]

It's hard to be like HAL, or own a HAL, unless I'm a bank.


On Jul 07 08:34 AM BigJake wrote:

> If HAL is trading the market up, why not buy folks?

Jul 07 11:32 PM

[Mark Bern:]

Because manipulation can go both ways. Only those in control know what HAL will do next. BTW, if I read your comment grammatically correctly, I do agree that, yes, some folk have been bought.


On Jul 07 08:34 AM BigJake wrote:

> If HAL is trading the market up, why not buy folks?

Jul 08 02:48 PM

[cameroni:]

The pickings are ripe in the sleepy summer months and thin trading rules the days. Goldman is surely complicit in the saga of a trader theft of their godless program designed for market manipulation. Some here know better though don't they. Guess they (Goldman) are officially off the hook now that the Russians or whoever have access to the secret code. The crash to come will now be someone else's fault. Good Grief!

I learned cynicism the hard way.

Do they really think we will collectively eat up any hair-brained story.

Jul 08 09:09 PM

[notblind:]

David Fry is unaware that GS is not in the TARP program.

These guys dont even do simple fact checking anymore.

Bloggers are making up facts and their readership doesnt even notice.

A lot of bloggers realize that putting out paranoid swill for the tin foil hat crowd gives them a higher eyeball count.

But what about the qaulity of those eyeballs?

Jul 09 09:27 AM

[RiskAverseA...:]

"Is the recent downturn in volume because Goldman’s computers were shut down for fear they were compromised?"

No. Volume is turning down because pigs really do get slaughtered. When, in fact, equity is dead money, what do the masses who got caught last year like a deer in the headlights do? THEY HOLD! Fantasizing that the status quo of the past couple decades will somehow soon return, weak hands hold, hoping to recover from last year's whipping. It is not gonna happen. Wall Street's credit bubble has popped. The best that can happen from here is that, the lender of last resort is able to control the bloodletting. Uncle Sam certainly CANNOT inflate the credit bubble with such vigor and reckless abandon as Wall Street before. This ALONE is critical to a return of the status quo of the past couple decades. And it is not gonna happen. Indeed, it CANNOT. Yet still weak hands hold, hoping for recovery.

Jul 11 11:38 PM

[BigJake:]

I'm just saying, if you think HAL is trading a certain way, stop complaining and trade with him...


On Jul 07 09:04 AM daniel3582 wrote:

> On Jul 07 08:34 AM BigJake wrote:

Jul 21 08:52 PM

[BigJake:]

Touche' Mark. Perhaps some have been bought, and if they have are they going to push stocks down or are they going to keep playing the game over and over and OVER again. I think you may have inadvertentley proven my point!


On Jul 08 02:48 PM Mark Bern wrote:

> Because manipulation can go both ways. Only those in control know
> what HAL will do next. BTW, if I read your comment grammatically
> correctly, I do agree that, yes, some folk have been bought.

Jul 21 09:00 PM