Friday Roundup: Commodities, Emerging Markets

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Most Julys recently haven’t been kind to markets. Virtually all were followed by good performance in August. It’s a strange occurrence to note frankly. But that’s been the theme and this July is starting rough and down that same path.





Investors are looking for good news from both earnings and economic data. Thus far they haven’t gotten it and markets have reacted accordingly. Absent these, it will be a challenge to hold things together until the fall.

Via our friend Jesse from Jesse’s Café Americain is this article quite critical of China’s near future regarding inflation and civil unrest. You might find it an eye opener.

I guess we put up enough charts to make up for yesterday.

Have a great weekend.

Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, BWX, LQD, GLD, DBC, USL, DBB, EFA, EEM, EWA and FXI.

Comments

[Macro_Man:]

Silver trends more and is more volatile...so, if one can stomach the volatility, I think it is easier to trade that than gold. Also, i find it more palatable to short than Gold, because one never know when someone will start buying Gold in size.

Anyhoo, I have been unwinding my shorts as it is possible we get a countertrend rally soon. In this case I will wait and put on a big short position when the rally runs out of steam

Jul 11 10:45 AM

[Larrysyr:]

Thanks for the link to the article about China. From that article, and others I've read, it seems that China is a really big gorilla but far less organized than its reputation. The central government keeps a tight lid on anything that threatens its power but really does not have enough power to fully control its huge population.

China is such a large part of the world economy we can't afford to be ignorant about them.

Jul 11 04:52 PM

[patarattat:]

Thank you for all the commentary and charts you put together. When trying to decide how to trade the earnings over the next few weeks it helps to know how the big money might be reading the tea leaves. In the past I have been able to make money by good old fashioned top down, bottom up research and left the charting to others. Since getting back in from cash at the March 9th low I am up 25% for the year, but all the media noise and shift in market tone has me diving back into cash again. I know the big money and market makers rely more heavily on charts these days so it seems wise to use them along with the fundamentals in this highly uncertain and fragile market. Absent any historic norms or hard data to guide us in the next few quarters, where we go from here is the lottery ticket we would all like to own. Until we know if this is to be the feared "W" recovery it seems wise to use every tool available to navigate this mess. Again... thanks from an old dog trying to learning a few new tricks.

Jul 11 06:58 PM

[Alphameister:]

By a fortuitous twist of fate, I was led to a wonderful article about Richard Leibling when I clicked on the above link instead of to the article on China, with which I also agree. One overall comment on your post: it seems to me that you are letting an overall attitude of bearishness color everything you see. Your comments on the various charts are uniformly negative, moreso than would be appropriate based on the charts alone. Likewise your comment on the referenced article on China. That author expresses confidence that the Chinese managed economy will all end badly, and he is rightly skeptical that the Chinese economy can drive a worldwide recovery, but you seem to assume the collapse is imminent while he does not. In any case, I thank you for the link to Daily Bell (to which I have now subscribed).

Jul 12 10:14 AM

[Alphameister:]

Elaborating on my above point, there was nothing that a chartist would consider bearish in the chart of FXI, and you claim to be guided by the charts, not fundamentals, yet your comment was a negative unrelated to the technical picture in front of you. Your comment on EEM ("not a fatal blow yet, but we'll see") also is unrelated to the chart before your eyes and is, instead, an anticipation of the chart.

Jul 12 11:23 AM

[sacking:]

Dave
Thanks for your inclusion of HYG in your recent charts. I've been using it along with BND for the bond portion of my ETF portfolio. HYG adds some spice to the safety of BND. It will be interesting to see how HYG performs over the next few months.
I always appreciate your comments. Hope your wife is recoverying well.

Jul 12 12:17 PM

[dcb:]

Yesterday Mr. Obama asked for more time patience from the public from regarding the economy. Personally, I do not believe Mr. Obama's policies deserve more time, they are misguided, driven by special interests, not directed towards the root of the problem , will actually make the economy worse, and rip off taxpayers for wall streets benefit.

He has abandoned the policies he stated he stood for while running for election at every chance when faced with industry pressure. He has allowed wall street to manipulate the markets increasing borrowing costs, driving up the price of oil , delaying recovery.

He has knowingly talked about green shoots when there were none, creating false expectations. If we wanted a president we knew would lie to use we would have kept bush.

He has spent trillions bailing out wall street to keep credit flowing while American's need help to reduce debts.

He has staffed the White house with wall street insiders.

If you believe, like I do, that Mr. Obama needs to change course and has had enough time I urge you to write the white house explaining why he has had enough time, and why he doesn't deserve more. Below is the link:

whitehouse.gov/con.../

Jul 12 01:38 PM

[tradetime:]

Thank you as always, the roundup and insightful and amusing commetary is always a pleasure to read.

Jul 12 02:58 PM

[stocknerd:]

These charts don't tell me much, sorry. I know all the TA nuts just love those moving average and supprt lines and Bollinger bands, but really guys and gals, do you really think ( i know you do) that the future, the ONLY place I want to know about, can be gleamed from all these charts? Trend lines do not equal market sucess. But, hey, if all those numbers make one feel better, do it. I think there are other explanations for WHY those charts say what they say. Charting is always in the past. I've rambled on too much. Bye.

Jul 12 10:12 PM

[Jabalong:]

This is a nice roundup - please put out on a weekly basis.

Jul 12 10:22 PM

[Free Mind:]

David thanks for your excellent charts and comments.
Strangely enough, from my own research, I came up with the same conclusions as the article you are quoting.

China's "stimulus" seems to have gone mainly into the assets market, provoking a new glut and getting us our latest spike in commodity prices.

As to the claimed spike in activity, it may well turn out to be fake. Cfr. on that point this Chinese scholar: search.japantimes.co.j...

The ethnic unrest in Xinjiang may also be confirming that China isn't as quiet as we think it is.

Jul 13 05:06 AM