Tuesday Outlook: Commodities, Global Markets

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The volume is light but those still involved have things nicely under control. The HAL 9000s aren’t as idle as individual investors in my opinion. For an inside look at how these machines run markets, please review these links that support Da Boyz in their enterprise here, here and perhaps here as well. These are eye-openers for sure.

Earnings are still rolling in and beating expectations is the name of the game. It used to be an old retailers trick to mark prices much higher and then cut them drastically to entice buyers to 50% off sales. It’s no different on Wall Street. Analysts and economists have been so wrong for so long the only safe bet is to lowball numbers and then be pleasantly surprised on the report. Anyway, I don’t make the rules and we must live with the tape.

Tomorrow is another day.

Disclaimer: Among other issues the ETF Digest maintains positions in QQQQ, SMH, EFA, EEM, EWW, EWY 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

[doubleguns:]

Obviously you are not capable of performing the analysis with the information given. You might try a few more lessons with big bird to help you figure it out and grow up.


On Jul 21 06:06 AM dosh tosh wrote:



> As anyways your analysis is essentially useless and reads like those
> cryptic newspaper clippings from A Beautiful Mind. Drivel and paranoid
> delusions.

Jul 21 06:59 AM

[Dr. O:]

The relevant excerpt from Ben Bernanke's Op-Ed in today's Wall Street Journal is below. In essence, easy money to continue. Hence, prices for most things including stocks, go up.

>>The depth and breadth of the global recession has required a highly accommodative monetary policy. Since the onset of the financial crisis nearly two years ago, the Federal Reserve has reduced the interest-rate target for overnight lending between banks (the federal-funds rate) nearly to zero. We have also greatly expanded the size of the Fed’s balance sheet through purchases of longer-term securities and through targeted lending programs aimed at restarting the flow of credit.

These actions have softened the economic impact of the financial crisis. They have also improved the functioning of key credit markets, including the markets for interbank lending, commercial paper, consumer and small-business credit, and residential mortgages.

My colleagues and I believe that accommodative policies will likely be warranted for an extended period.<<

Also, there's been some chatter out of the administration very recently, including Obama and Summers, about the need to re-build our manufacturing base, something I agree with. The US ranks very low in terms of exports as a percentage of GDP. And manufacturing jobs are exactly what the US needs to rebuild wealth.

However, a focus on exports by the administration is being interpreted as "code" for a weaker US Dollar policy. Rightly so, I think. We can't export if our major trading partners' currencies are artificially low--China officially "sets" its currency low, Japan has had an official weak Yen policy for many years, even the Swiss National Bank has officially endorsed a weak Franc policy--the US Dollar has held up almost by default.

But I suspect that most involved both inside and outside the US have agreed that a weaker Dollar will promote US export growth, US economic stabilization, and, inflation in commodities; this is good news for fragile emerging and developing market economies, to which the European banks are perilously tied.

Bottom line: Dave is right, as the US Dollar takes another leg lower, stock and commodity prices will rise. Inflation over deflation.

Jul 21 07:05 AM

[damienhaas:]

When you are talking about inflation, have you think about Wages(That is what use to buy good and services) which is in decline. How do have inflation when wages keep on declining. One more factor is the collapse of housing price bring the asset price down even stock are rising. Maybe you are referring more to Stagflation rather than Inflation.


On Jul 21 07:05 AM Dr. O wrote:

> The relevant excerpt from Ben Bernanke's Op-Ed in today's Wall Street
> Journal is below. In essence, easy money to continue. Hence, prices
> for most things including stocks, go up.

Jul 21 07:19 AM

[SRF4REAL:]

Thank you David I appreciate the time you take to do these.

It's quite a rosy picture, with these wonderful rose colored glasses I'm wearing! I feel like the article and charts are showing us the 800 pound gorilla in the room but pointing out the pretty portrait on the wall to distract ... be very afraid! Now where do I sign up for B of A to gamble with my hard earned money!

Jul 21 07:35 AM

[F. Bradeen:]

David, Could these Dark Pools be where all the low/missing volume is occuring?

Jul 21 08:18 AM

[David Fry:]

Bradeen, my understanding is all volume must be reported but I could be wrong.

Jul 21 08:26 AM

[predictorma...:]

So looks like we are going up for a while. This market is all about momentum.

I think the low volume is due to the "out of the market" (not sidelines) cash. If you got scared (not talking about SA readers, but regular folk) and pulled out in November, you be in about the same place as all of us, without all the ups and downs. Why get in?

That being said I think we're heading north until October. Then a drop, and then back to moving up.

Jul 21 08:53 AM

[Dr. O:]

Tim Geithner to Prime Minister Hu Jintao: "The dog ate my currency."

Jul 21 09:14 AM

[ecoco:]

For how long can this Market consider beating crappy earnings and lower expectations as good news. None of the reported 2Q earnings to date indicated any recovery and all had a lower future outlook, yet this is interpreted as GOOD news, can anyone tell me what BAD news look like?.
The US economy is consumer driven, and as soon as unemployment and consumer sentiment indicators are out, we will discover the true nature of this economy and were it is heading to. GOOD LUCK FOR THE BULLS.

Jul 21 09:34 AM

[robert.b.fe...:]

Graet job as always David. Keeping the 22 DMA is encouraging but I think a little pessimisem is still warrented. Perhaps as we edge into the fall trading season thing will get clearer as volume increases. I'm still wondering why GS is being allowed to run economic policy from the White House. Well good luck all.

Jul 21 09:42 AM

[expat in China:]

200 day moving average!

Most impressive! who so great a man can invert the direction of such a heavy beast, applaud the crises whisperer.

Jul 21 10:07 AM

[AndrewBaker:]

XLF and BKW are getting interesting, only maddingingly slowly. The banks and financials can't be propped up forever, especially as in a trading range, profits are being taken on the highs, and eventually that will drain the supply of new buyers who can see that there is no consistent rise expected any time soon, so why buy in now?

For those with an interest in reality, banks and financials never made an economy; they merely profit from helping businesses producing real goods that actually make a viable and successful economy. And that is not happening here, now.

So, I'm staying short the money businesses, and watching XLF and BKW: when they really drop, then's when FAZ (and SKF) will come into their own.

(SDS is worth holding too, right now, as the general market will drop as well.)

Jul 21 12:42 PM

[corey mendel:]

Dosh Tosh... Are you still in High School?

Jul 21 12:58 PM

[Alex Biggs:]

That's an overstatement. Just cuz.


On Jul 21 12:58 PM corey mendel wrote:

> Dosh Tosh... Are you still in High School?

Jul 21 03:05 PM

[robert.b.fe...:]

Just wait until the minimum wage increase goes into effect. Those folks making $8- $10 an hour will really see their buying power erode. People on small fixed incoms will feel the sting too. Oddly enough after the adjustments are made and the dust settles those who benefitted from the minimum wage hike won't really have gained much if any.


On Jul 21 07:19 AM damienhaas wrote:

> When you are talking about inflation, have you think about Wages(That
> is what use to buy good and services) which is in decline. How do
> have inflation when wages keep on declining. One more factor is the
> collapse of housing price bring the asset price down even stock are
> rising. Maybe you are referring more to Stagflation rather than Inflation.
>

Jul 21 04:37 PM

[ebworthen:]

Why not get out of BAC so HAL 9000 can't play with your money?

A lot of this low volume buying is irrational exuberance, in my opinion.

Great charts, thank you. What's your take on most averages going over the 200 day SMA and the 50 day EMA crossing the 200? Resistance or a breakout? Do you believe 11,000 for DOW?

That would be a precipice from which to drop, eh?

Cheers,
Eric

Jul 22 11:25 AM