Tuesday Outlook: Commodities, Global Markets

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The rollover in the McClellan Summation Index probably indicates a temporary top is in. Does that mean we drop like a stone? Probably not despite the negative 200 point DJIA day. Will we get just a tiresome trading range? Possibly. But, we have the end of month and quarter in front of us with earnings beginning next month. Perhaps bulls will see more green shoots, or not. It just doesn’t seem many folks are involved in markets beyond Da Boyz.

Speaking of them, it’s pretty amazing to see a report of massive bonuses forthcoming despite the corporate denial. What tin ears these guys have! The other thing that’s disturbing is the level of insider information that passes from officials to their pals. Buffett is an insider, period, and has sat in on many meetings with Fed and Treasury officials. It’s unseemly for him and others to parlay that to gains unavailable to others. It’s said amusingly that Geithner has Pimco’s Bill Gross on speed dial. Further, should politicians like Durbin and others with inside information from the Fed and Treasury invest with those capable of gaining on their behalf?

The great news for those following this is that my wife and I visited her oncologist today and she gave her the news she wanted to hear—no chemo or hormone treatment. Whew!

The bad news is my new Lenovo crashed producing the “blue screen of death”. It’s being returned, can you believe it? (Please, all you Dell and Mac fans, back off!)

The sad news is I travel to Iowa tomorrow to see a lifetime friend whose cancer has progressed seriously. I will fly from Baltimore tomorrow morning and then drive with another common friend from Chicago and return here the next day. Perhaps a post will be missed.

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

[Infinitus:]

Hello David,

I would like to thank you very much for your daily effort in giving us the TA outlook of multiple markets. I enjoy it very much. What would my day be without it? :-)

Kind regards from Frankfurt/Germany

Markus

Jun 23 04:52 AM

[manya05:]

Yes, thank you for calling a spade a spade. Corruption was always part of the relationship between the government and Wall street, but now there is not even the pretense of a level-playing field for the small investors like us just trying to protect our retirement nest egg. What is one to do in the presence of this corruption?

Jun 23 05:41 AM

[Dmseaman:]

God bless from sunny Iraq, congrats on the great news about your wife, be safe on your travels. You give a sailor in Iraq something to look forward to everyday.

Jun 23 06:31 AM

[User 357705:]

Invest in guillotines?


On Jun 23 05:41 AM manya05 wrote:

> What is one to do in the presence of this corruption?

Jun 23 06:48 AM

[Wizler:]

Curious, is there any de-coupling from the emerging market ETFs prices and the local markets? For example do FXI and EWZ prices closely match to their local stock market price movements, or are the ETFs too tied to US markets to really de-couple, esp during this program trading environment?

Jun 23 06:59 AM

[MKW:]

About there not being anyone interested in the market beyond Da Boyz... I don't know if you ever read Tyler Durden's posts on SA, but a couple weeks back he noted that institutional and individual investor volume on the major stock exchanges had sunk from an average 3.8 billion shares a few months ago to 1.8 billion shares. That left, as he put it, "a bunch of computers desperately trying to front-run each other" as the sole remaining source of market volume. Well, that and a certain large bank which likes to regularly shout "Boo!" in its own special way by dumping multi-million share market buy orders of SPY into the system.

Jun 23 07:16 AM

[frosty:]

Most of you characters who like to draw horizontal support-resistance lines also use the SMA as a signal indicator. However, the 200 day SMA includes last Sept & early Oct when the markets were still relatively high. Those days form 180-200 days ago carry the same weight as recent days in the SMA. If you use the EMA, which weights recent days more than long ago days, a different picture emerges. Since early April, for both DJIA and DJTA, the 200 day EMA is resistance and the 50 day EMA is support. SPX shows nearly the same (support is somewhat above the 50 day EMA). In none of these cases, however, have the indexes penetrated the 200 day EMA. So the "convergence" of the 200 day SMA and the horizontal "resistance" line doesn't, in my mind, hold as much significance as the fact that the 200 day EMA has not been penetrated. Why favor the EMA over the SMA? It's a matter of "what have you done for me lately?" versus "remember when?".

Jun 23 08:28 AM

[BiscuitCreek:]

Thanks, Dave! The best to you and your family in what has certainly been a tough year.

Jun 23 08:34 AM

[basehitz:]

David,
Great to hear the news or your wife's progress.

As far as the casino is concerned, here's another tell:
"Goldman CEO Lloyd Blankfein, a week and a half ago, stated that this is not a recovery, the recession will be ‘long and protracted’, and any recovery would be ’shallow’. Astute traders snickered that Goldman now had to be short."

www.investmentpostcard.../

I highly recommend getting on email distribution for above. Using internet sources, I have completely replaced Tout TV with much more credible sources. Speaking of which, thanks Dave.

Jun 23 08:45 AM

[basehitz:]

Editorial note:
Above referral is for Prieur du Plessis, who accesses many writers including the above linked author.

Jun 23 08:48 AM

[fatcat:]

Great news for your family,Dave...Prayers can be answered...

Jun 23 08:54 AM

[teegee:]

Congrats on the news on your wife's treatment. My wife and I had to undergo the same issues this year, and thank God, no chemotherapy was needed. I don't know what type of cancer your wife has, but encourage every woman you know to get regular mammograms.

Jun 23 09:21 AM

[robert.b.fe...:]

Thanks Dave our prayers go with you and your wife. Now about "Da Boyz." Isn't insider trading still illeagal? Perhaps we can lock up Durbin to keep him out of trouble. If he admits to using inside info he goes away for insider trading. If he denies it he goes away for the same stuff that Martha got wacked for. Just sayin.

Jun 23 09:29 AM

[teegee:]

Seems like a new mantra....."Sell in June and miss the swoon" . When do all the Wall Streeters take their bonuses and "head off to the Hamptons" ( as Cramer would say) for the summer?? Soon? Volume will get even lower....HAL the computer will then be in charge..... "Dave, what are you doing?"

Jun 23 09:30 AM

[elee:]

Very glad to hear the good news about your wife. Hang tough & keep up the good work.

Jun 23 09:31 AM

[Bull Run:]

I agree with your inside trading views, but GS has been the King of insidie trading for many yrs. considering their former employees are in every major Government post. The Treasury, the White House, the Fed. and they act on their inside information, to keep ahead of the curve. GS is the major player in oil derivitives, and was able to get out of their long positions in July 7th 08. before the collapse of the oil market becasue of this information. The Feds at that time were borrowing $1.5 trillion in US dollar abroad from foreign Central banks to support the "Freddies", which caused the turn around in the US dollar, and the collapse of the Oil market. They knew this ahead of time through their previous employee contacts, expecially their Treasury "contacts".

Jun 23 10:34 AM

[somecatchyp...:]

If I'm remembering a long ago high school history class correctly, the French Revolution had something to do with a hyperinflation.


On Jun 23 06:48 AM User 357705 wrote:

> Invest in guillotines?

Jun 23 11:21 AM

[AndrewBaker:]

The sell-off was across the board, suggesting not only are real people now more cogniscent about this latest rally being for suckers, but trading computers, whether their intelligence is expert or otherwise, have been inculcated sufficiently to want out too.

I hope that people can better pick out the areas wrongly sold down and make a profit by moving into them - and I humbly suggest agriculture, precious metals and Australia are worth weighing into - but the broader market is just too high; there are no green shoots, and it's best to get out and even go short (S&P 500, and financials especially).

If we break down through 875/870 on the S&P 500, then it's going lower still, and a fall below 830 puts 800 at big risk, IMHO.

Glad I bought my FAZ back last week; maybe a day or two early, but better than missing the boat and watching from the shore!

Jun 23 11:47 AM

[DellRocks:]

Lenovo SUCKS

Jun 23 11:59 AM

[GRAFFOL:]

Great news about wife. Glad to hear. Thanks for sharing.

Keep at it. Your column is great and very helpful for us ignorant investor´s advisors. Something is cooking. That for sure. And though there are lags and manipulation, 2 + 2 is always 4.

Jun 23 12:36 PM

[Stockpickin...:]

once again, your insight and charts are awesome, please travel safely and be safe.

Jun 23 03:35 PM

[aarc:]

Most traders are now short the markets using either the daily 200 ma indicators or weekly momentum divergence indictors.

These are conventional TA.

Since most of them are already on the hook, anything that can upset their short trades will squeeze them hard.

One "unconventional" method of going against the crowd is by using a fast MACD indicator. I am using the 2-10 Oscillator

The daily fast MACD is now hitting extreme level of -26 BUT the price of SnP at today's low of 888.86 is still higher than the last low of 879 last May 15 when the MACD was at -17.

It is called a bullish divergence.

If it works, it works against the majority of traders who are using the weekly momentum divergence short indicators and the daily 200ma breakdown panic sellers. It works against the majority and can easily cause a major short squeeze and a vertical rally once SnP goes above the daily 200ma again then followed by Dow Jones going above it's own daily 200ma a few days later. Then followed by those who will be trying to short Dow Jones and SnP potential Head and Shoulders pattern on the daily and weekly charts, then followed by those who entered shorting the markets using the weekly divergence short signal if and when SnP goes above June 11 high of 956.

Major fibonacci confluence resistance on the weekly and monthly chart is at 962.

If you are fast and nimble, you can try going against the crowd using the daily fast MACD bullish divergence indicator. It is not a high probability trade but when it works it can cause massive short squeeze in a low-volume trading environment such as we have these past several weeks. Low volume usually means consolidation range and since volume to the downside has not gone up yet - meaning no distribution yet; then there is still a good chance that volume can ramp up on a rally instead of on a sell-off.

Daily and weekly VIX is still in a downtrend, so it cannot be used by the bears to trend trade to the downside.

There are so many reasons the markets should go down both technical and fundamental.

But the end of quarter is a major problem for shorts since the mutual funds' window dressing season is upon us. So be very careful with your short positions.

Jun 23 04:45 PM

[User 21416:]

Dave,
Take care of your family and friends, everything else in the end is worthless.
Tim

Jun 23 07:38 PM