Friday Roundup: Commodities, Emerging Markets

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You have to grit your teeth and move forward sometimes given the nonsense, unethical behavior at the highest level and the lying taking place every day. It’s hard to deal with as a human being and remain disciplined. Succeeding in doing this is where the rubber meets the road.

That wraps up a fun week. We didn’t have as much fun as others given light positions but the month’s not over and neither is the year.

Enjoy your weekend.

Disclosure: Among other issues the ETF Digest maintains positions in: QQQQ, SMH, EFA, EEM, 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.

Comments

[untrusting ...:]

You might be right, but no indicators seem to have much predictability or rationality in this market. It certainly does appear that GS and the 2% of the program traders that are dominating the market volume with estimates as high as 50-70% of the entire market volume, can continue to move the market up for as long as they choose to do so. However at some point, it will become far far more profitable for these "crooks" to sell off all their stock inventory, begin large short positions, and proceed to drive the market back down towards the lows. The big question is when? Best guess is probably the Aug-Oct. traditional time frame. If short interest starts to increase a lot, this may be the tip-off that da boys are changing direction. One thing is for sure, GS will move the market in the direction that makes the most amount of money for themselves.


On Jul 25 12:07 PM RiskReturnOptimizer wrote:

> Watch relative performance of QQQQ vs. XLV ... this will determine
> when the rally in SPY will be over ... any significant sector rotation
> away from Tech into Health Care will likely signal end of rally in
> SPY.

Jul 25 06:22 PM

[buyforeclos...:]

When the markets turns south that India ETF is going to get crushed, that is damn near where it was in 2008? Seems like it is shaping up for a very profitable short at some p[oint when reality in Markets kicks in...in the meantime the Dow could go to 10,000 this year based on pure garbage ( joke estimates and GS hype )

Jul 25 09:36 PM

[buyforeclos...:]

Untrusting i couldn't have said it better myself...if u have a minute check my comments on the Oil topics ( Wtf/Brent) this whole Oil price increase and market rally is a sham and it was instigated at 14000 when GS and others went short and then went long at 6500 and created a Bull market with Bullsh_ _ low estimates..and they wil lgo SHORT again and get even richer! That is a fact

Jul 25 09:40 PM

[buyforeclos...:]

Greyowl wrote " And despite dismal revenues, it seems the economy is starting to turn around and in 6 months the news may well be much better".
Just what news do you expect? Good news is NOT a catalyst for this market rally...havent you figured out what the catalyst really was yet?
Rest assured at Dow 10,000 or mayeb a bit higher or lower, GS and the other criminals will use higher unemployment, less consumer spending, continued residential foreclosures and a huge bust in commercial real estate as their rationale to go short and downgrade stocks...

Jul 25 09:44 PM

[Larry House:]

I've heard the comment more than once that on average, 70% of the daily activity in the stock markets is done by computerized trading. Does that sound like any individual can have a fair chance? The market moves as those computer programs direct, not according to fundamentals. I'm not sure it is a game I want to play.

Jul 25 10:44 PM

[HunterGVL:]

Am I even an investor anymore? Are any of us? Lately I am beginning to think I have more in common with a seer, than any kind of rational, cautious investment professional.

Great article, David.....we all know the deck is stacked and always has been, but now that the government is involved, it adds a dimension of randomness that cannot be accounted for with traditional research and analysis. The New York Fed has created a council of insiders including the Soros, Credit Suisse, PIMCO, U.S. Steel, and even a Carnegie? First question that pops in my mind?..Are these insiders influencing policy, making policy, or dictating terms? PIMCO already stepped away from the government in one situation where there was some question about the government reneging on agreements made in the Chrysler and GM Bailouts. So, now El-Erian is in the wheelhouse again looking for guarantees that only PIMCO can get? (Thank god I have 17% of my money with PIMCO is all I can say). But the real issue here is that there is not even an attempt at discretion. The Gangsta government (See the Minnesota Representative call Barney Frank a crook on YouTube) is working feverishly behind closed doors to influence markets, the economy, public opinion, and financing. I remember not long ago when the important thing was to determine if the CEO was cooking the books or fudging his numbers. Nowadays, I am sure all the books are being cooked, but I have no idea how many chefs are in the kitchen and whether they want that stock to go up or down. In effect, I have become a Macro investor; security analysis is less important now.

For Traders and investors like myself who trade infrequently but still move my money around as conditions dictate, the deck is certainly stacked. Am I the only one at the poker table who doesn't know who the mark is? Is Goldman making millions of trades per day just to make half a penny per transaction? Is there no volume, or some, or a lot? Where's the SEC regulators? Where's the Treasury Dept.? Where are the watchdogs? Why are we still allowing derivatives to be created, unregulated?
The only thing I can do is try to put myself in Paulson's or Geithner's shoes and try to see through their eyes, but I don't fit very well in their clothes and when I am done walking in their shoes for a few moments, I feel a powerful need for a shower.

Jul 26 10:30 AM

[Old Rick:]

Larry, the SEC is looking at so-called "High Frequency Trading" (HFT) wherein these programs can analyze spreads at millisecond timeliness, post a bid for a couple milliseconds, then withdraw it and get a sell in at the higher bid. I don't fully understand all the nuances, but there have been stories in recent days in WSJ, Bloomberg, etc. That paragon of political integrity, Chuckie Schumer is demanding an investigation. I think zerohedge and themistrading have discussed this fairly extensively. Seems that GS is now making money the old fashioned way; they're cheating!!

Jul 26 10:37 AM

[adan:]

lately, i'm especially reminded of the brokers' and money trusts' activity described in:

"Rainbow's End: The Crash of 1929 (Pivotal Moments in American History)" by Maury Klein

Jul 26 11:45 AM

[Alphameister:]

An awful lot of whiners continue fighting the tape and the Fed. All of you had an opportunity to buy GS well below the level at which the well-connected Buffet bought in. I'm guessing that none of you took advantage of that opportunity. While my fundamental stock analyses were not well rewarded last year, they have been very well rewarded in 2009. So bring on all those "thumbs down" ratings that a comment like this is guaranteed to produce; I can handle them.

Jul 26 01:11 PM

[What's wron...:]

There are bulls, bears and pigs.


On Jul 26 01:11 PM Alphameister wrote:

> An awful lot of whiners continue fighting the tape and the Fed.
> All of you had an opportunity to buy GS well below the level at which
> the well-connected Buffet bought in. I'm guessing that none of you
> took advantage of that opportunity. While my fundamental stock
> analyses were not well rewarded last year, they have been very well
> rewarded in 2009. So bring on all those "thumbs down" ratings that
> a comment like this is guaranteed to produce; I can handle them.

Jul 26 01:41 PM

[marco caricom:]

You may have some good points.....but i'd be more comfortable investing in GS manager/banksters shares and parachutes than in GS itself.


On Jul 26 01:11 PM Alphameister wrote:

> An awful lot of whiners continue fighting the tape and the Fed.
> All of you had an opportunity to buy GS well below the level at which
> the well-connected Buffet bought in. I'm guessing that none of you
> took advantage of that opportunity. While my fundamental stock
> analyses were not well rewarded last year, they have been very well
> rewarded in 2009. So bring on all those "thumbs down" ratings that
> a comment like this is guaranteed to produce; I can handle them.

Jul 26 01:51 PM

[Belome:]

Perhaps it will take something bigger than Obama, GE and Cramer, something they cannot hide from the masses like the pandemic H1N1coming to a town near you this fall to remind us of how the average consumer is really doing in this economy. Just google it you'll see.

Jul 26 03:00 PM

[Larrysyr:]

David,

Thanks for mentioning Build America Bonds. These are one of the most curious inventions I have ever encountered, and in my work in the municipal sector, the main enthusiasm I see for these is from underwriters.

The "appeal" of BABs is that the bonds are issued at taxable interest rates (higher) than customary tax-exempt municipal bonds. The issuer commits to paying the taxable rate to the investor and receives a rebate from the IRS to offset the difference in interest costs.

The trouble is that the issuer is counting on the Federal government to stand by the program as long as the bonds are outstanding. The weirdest feature of these bonds that I have encontered, however, is that the rebate is subject to an annual appropriation that Congress can withdraw at any time. Thus, every issuer of BABs runs the very real risk of skyrocketing debt service costs down the road, long after the underwriters have collected their fees. Investors, of course, run the risk of losing in a municipal bankruptcy. And taxpayers get hit either way - funding the rebates or losing out on municipal services when local budgets get slashed.

These bonds are bad news, and I would advise everyone to steer clear of them and be very careful about any entity involved with them.

Jul 26 03:12 PM

[Macro_Man:]

Regarding the NYSE McClellan Summation Index question. It doesnt' look like the pattern is completed yet. I think after, perhaps a small correction, stocks could still trend upward and at that time we can compare the highs on the summation index to the prior high. If, and I think we will, we get a negative divergence then that would be an early indication that stocks have topped.

But, market indicators and oscillators are subsidiary to the trend and not meant to be used to bet against the trend....and right now there is no indication the trend has changed, still setting higher highs and higher lows. So, the reader will be right eventually...but not just yet.

I think the play right now is to close ones eyes/hold ones nose and keep buying the dips till Dow 10,000 and S&P 1000/1500. For those who are skeptical perhaps to do this with put protection.

I am slightly short at the moment and suffering a little bit. Will unwind earlier of any correction of 2 or 4% or one week. I own puts so can go long against it. Waiting till September/October and those numbers on the Dow/S&P for the market to break trend and go lower.

In the meantime, I think Amazon is a potential short given the island reversal on Thursday/Friday. I think gold and silver are in a countertrend rally and should turn over in the near term.

I am also watching China very closely and if it starts to roll over, everything else should follow with varying time lags. I would give more credence to a definitive Chinese stock breakdown and use oscillators carefully. While a negative divergence in overbought area is a powerful and not so common indication, may be prudent to wait for a negative divergence, a bearish moving average crossover and a bearish center line cross over.

If we turn lower again, the downtrend will be fearsome as well. But, patience will be key. In bear markets, bulls lose money and bears lose money!

Jul 26 08:33 PM

[Moon Kil Woong:]

Thanks for your documentation about IBES manipulation. This is just another example of the unscrupulous wiping away of bad calls and history that the securities business undertakes.

I agree with commenters that the machines have been hard at work trying to generate decent volume again. Too bad they keep falling short. I guess GS needs approval for stratospheric VaR even exceeding the SEC's allowance to do that. So if the FDIC won't approve GS to pay out massive capital to its executives and keep VaR high will that mean program trading will drop in half? If so, I hope the FDIC refuses their request.

Jul 27 12:01 AM

[bobbobwhite:]

Great idea! Perhaps an ETF group for WS executive payouts, bonuses, salary increases, golden parachutes, stock options, expense accounts, misc. perks, etc? Retire in a week, two at the most!

"You made only 2000% in bonuses? I made 5000% in golden parachutes?"


On Jul 26 01:51 PM marco caricom wrote:

> You may have some good points.....but i'd be more comfortable investing
> in GS manager/banksters shares and parachutes than in GS itself.
>

Jul 27 10:02 AM

[Parameshwaran:]

EWJ -- To me it was not annoying on 10-07-09.Rather i found a good long trade with the least risk. A close below 9.16 would have been my exit. My upside target is 9.93.

Jul 27 11:12 PM

[Seeking Fre...:]

where did you get the data that showed when GS went short?


On Jul 25 09:40 PM buyforeclosures wrote:

> Untrusting i couldn't have said it better myself...if u have a minute
> check my comments on the Oil topics ( Wtf/Brent) this whole Oil price
> increase and market rally is a sham and it was instigated at 14000
> when GS and others went short and then went long at 6500 and created
> a Bull market with Bullsh_ _ low estimates..and they wil lgo SHORT
> again and get even richer! That is a fact

Jul 30 05:14 PM

[tunaman4u2:]

Buy when fearful... I see no fear & all greed right now. Too bad holding cash will get crushed with inflation eh?

Aug 08 01:09 PM

[BPYHO:]

Gimme a break dude, I think most of the readers on this site would just like to see SOME signs of improvement in their/their loved ones daily lives. I think most want the REAL economy to improve and are mad that these crooks in GS ect are getting/making millions while mainstreet is struggling....


On Jul 26 01:11 PM Alphameister wrote:

> An awful lot of whiners continue fighting the tape and the Fed. All
> of you had an opportunity to buy GS well below the level at which
> the well-connected Buffet bought in. I'm guessing that none of you
> took advantage of that opportunity. While my fundamental stock analyses
> were not well rewarded last year, they have been very well rewarded
> in 2009. So bring on all those "thumbs down" ratings that a comment
> like this is guaranteed to produce; I can handle them.

Aug 08 05:28 PM