Wednesday Outlook: Commodities, Global Markets

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The markets are poised to rally despite poor data from the previous week. Companies in focus continue to beat (INTC and GS) while those that don’t (DELL for example) are ignored. Obama perhaps admits the obvious, joblessness will continue to tick up and investors will ignore it. Retail sales are spun as positive even though the view inside the numbers is quite negative. They sold the news on GS somewhat today and insiders there have been big sellers of the stock so it's reported.

Below is extended trading from this evening and you can see the big reaction rally courtesy of MarketWatch. The “after hours” is sometimes referred to cynically as the “amateur hour”.



We’ll have to see if there’s a big follow-through tomorrow.

Let’s see what happens.

Disclaimer: Among other issues the ETF Digest maintains positions in: IEF and IYR.

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

[Nathaniel C:]

Thanks David for the charts.

Jul 15 02:32 AM

[Maxe Paul:]

looks like party time again here in Australia, let's get the music started www.youtube.com/watch?..., and pop open the champagne, guest of honour is Meredith Whitney.

Jul 15 04:22 AM

[imex68:]

i wish i was a bank with toxic assets and the people´s money via the Treasury to look like a great company
8-=)

Jul 15 05:58 AM

[Robert J C:]

David you seem to use the 22 period MA on the weekly charts most often, but today there were many 89 period MA as well. Could you share your thinking on when to use one or the other ? Could you include EEB sometimes as well ? Thanks.

Jul 15 06:13 AM

[Dr. O:]

And I thought I was cynical, lol! Nonetheless, I am positioning for a trading rally lasting a few weeks from here. Long XLF, GS, SSO, and soon to be long QQQQ, SLV, UDN, and OIH, maybe FCX and FXI.

Jul 15 07:13 AM

[AndrewBaker:]

I am amazed that markets can move so well against the force of gravity. And I'm amazed at the thumbs down that came late in the day after so many thumbs up for bearish comments I made yesterday. I wonder what the bulls are on, and is it being handed out free with every stock you buy, and double if it's a financial?

Jul 15 07:40 AM

[Greyowl:]

For me, comments on Seeking Alpha serve as a contrarian indicator. When they become mostly bullish, I'll start selling off and prepare to short the market.

On Jul 15 07:40 AM AndrewBaker wrote:

> I am amazed that markets can move so well against the force of gravity.
> And I'm amazed at the thumbs down that came late in the day after
> so many thumbs up for bearish comments I made yesterday. I wonder
> what the bulls are on, and is it being handed out free with every
> stock you buy, and double if it's a financial?

Jul 15 08:55 AM

[daniel3582:]

Here are the expected daily ranges for these various trading vehicles, based on DeMark’s TD Range Projection data:

SPY
Expected High 91.13
Expected Low 90.17

USO
Expected High 32.53
Expected Low 31.53

UNG
Expected High 12.68
Expected Low 12.45

QQQQ
Expected High 35.95
Expected Low 35.56

AAPL
Expected High 142.73
Expected Low 140.71

IEF (7-10yr T Bonds)
Expected High 93.23
Expected Low 91.29

Jul 15 09:00 AM

[boost:]

I see in FXI you are stating the range wont last long as the bands predict. Are you predicting a move to the upside or the downside? I am reading alot that supports future movement for both sides of the coin. i.e. Chinese inflation will cause FXI to retract off of 40 OR China will lead the way out of the recession thus FXI will start to rally above 40.

Jul 15 09:07 AM

[robert.b.fe...:]

Thank you Dave. Looks like the spin doctors are working overtime as the " Not as bad as expected." mantra is loosing it's luster. Has any one noticed that the bailed out rgurgitated companies are getting special tax dispensations now on top of everything else? How can Ford (F) compete with Government Motors if they are the only ones paying taxes? It's the same with GS and the rest. How will firms that didn't take TARP fare well at tax time when thier compettitors don't pay any?

Jul 15 09:11 AM

[Maxe Paul:]

Currently dining on a "Bear Rump Steak",
washed down with "Kool aid/vodka shots".

You get a 25% discount if you mention Meredith Whitney.


On Jul 15 07:40 AM AndrewBaker wrote:

I wonder
> what the bulls are on, and is it being handed out free with every
> stock you buy, and double if it's a financial?

Jul 15 09:38 AM

[Archman Inv...:]

I am just sticking to the same formula that has made money for the past decade and a half. Never to bullish, never to bearish, and keep enough on the sidelines to take advantage of opportunities.

compdivplan.com

Jul 15 11:38 AM

[Bull Run:]

It looks as though the US dollar has finally broken through the 80 cent index range. Central bank intervention could not of lasted much longer. CDN dollar has risen a cent/day again. Ag. products and exporting companes should do better. EK,and Heavy contruction, but will the dollar's fall be a trend or short lived?

Jul 15 11:50 AM

[TurtleTrader72:]

Nice day for the bulls but I would not get comfortable. This morning we saw the VIX hit new lows suggesting a higher level of investor complacency (greed) within the markets. According this classsic greed/fear indicator, investors are more complacent now (at the markets current level) than they were when the S&P500 was at its high of 956 back on June 11th. What this means is that the recent pullback in the market (over the last few weeks) has not created any fear among investors which generally suggest somewhat euphoric ("greedy") conditions. Although the markets may keep moving higher, these lower VIX levels suggest a higher level greed built into them which makes more risky than they were even a few weeks ago (despite being at lower levels). In addition to this, we noticed a "up gap' (in the daily charts) being created this morning which is another sign of excessive trading practices. Such 'up gaps' almost always get filled and is only a matter of time. Today's strong rally looks convincing but I would suggest caution to be taken as it is starting to show signs of 'greed' which is rarely a good thing, at least if you are a bull.

Jul 15 12:03 PM

[Archman Inv...:]

Bull run:
Here is my scenario of dollar:
If most economies (ex USA) recover: Dollar down
If all economies recover: Dollar down
If USA only recovers(not likely): Dollar up slightly
If all economies stay in the toilet: Dollar up

I guess you have to be watching every possible scenario.

Jul 15 12:05 PM

[AuGod!:]

Hmmm ... seems an ideal scenario for massive currency devaluations a la FDR. On the other hand , a la Harry S Truman, the market may do that job, without inside intervention. The result either way is that holders of currency, U.S.$ especially, could end up with the Mother of all haircuts. I cannot verify so ask if there is any truth to the rumour that U.S. embassies are being instructed to hoard local currencies? Something isn't right.

Jul 15 12:11 PM

[David Fry:]

I confess to forgetting to alter from daily 89 MA ot 22 MA on weekly charts. Just some sloppiness I noted too late. Sorry.

Jul 15 01:05 PM

[Shiv Kapoor:]

Been watching your comments on GS. Dunno why I have a bad feeling about this. Cant see anyone, be it a person or a program beating the markets in perpetuity; buy and hold person like Buffet perhaps, trader unlikely. Am hoping GS is not Enron II in the making. In the meantime, I do hope the auditors are exercising extra due diligence.

Jul 15 01:42 PM

[coloneldebu...:]

Because the auditing profession did such a bang up job with Enron? Auditing in the US is a joke.


On Jul 15 01:42 PM Shiv Kapoor wrote:

> Been watching your comments on GS. Dunno why I have a bad feeling
> about this. Cant see anyone, be it a person or a program beating
> the markets in perpetuity; buy and hold person like Buffet perhaps,
> trader unlikely. Am hoping GS is not Enron II in the making. In
> the meantime, I do hope the auditors are exercising extra due diligence.

Jul 15 02:20 PM

[dcb:]

So I have been trading a while now. still working on it. you can see the folks buying are not investors, but really sopisticated players playing games and head fakes. the security was TBT. I have a buying and selling method based on an indicator. What was amazing towards the end of the day as hedge funds, or non goldman folks were just done taking profits (good buy entry point) the security exploded like I have never seen. it wasn't just a one big order, but order after order was placed at exactly the right time.

My guess is that folks who made bets earlier did not want to take profits yet decided to run it up more. It was quite insane. This wasn't the stick save action, but clearly something else. the security would have been up for the day anyway. I also know that when these guys have decided they have had enough profits they can see the crap on a dime.

I know some things, and it has been clear to me for a while that these big players using market mechanisms are creating huge amounts of macroinstability for their own benefit. I believe in the free market and all but when on firm trades such a huge percent of the overall market there is a problem.

It makes no sens to have the last three days go up so much. based on any rational multiple. You'd think the government would wise up, but when you are controlled by GS I guess you do what they want.

Jul 16 08:22 AM