Thursday Outlook: Commodities, Global Markets

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I wasn’t impressed by today’s action frankly. In many important sectors, we’re still down on the week and markets looked tired. Bulls need a stimulus themselves and August is not generally a high volume “newsy” sort of market environment.

But, you never know what will happen as the news cycle isn’t predictable.

See you tomorrow!

Disclaimer: Among other issues the ETF Digest maintains positions in SPY, MDY, IWM, QQQQ, SMH, RKH, XLF, XLI, XLB, XLI, IYR, XHB, TBT, UDN, DBC, USL, DBB, XME, DBA, MOO, EFA, EEM, EWJ, EWY, EWA, EWC, EWW, EWZ, RSX, IFN 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

[Dr. O:]

On the one hand, market momentum is up (heck the MDY is up 17% in the past 4 weeks), money is for nothing, and the "worst" is in the rear view mirror. On the other hand, the data this morning shows foreclosures still rising from a high base, unemployment claims rising into the mid-500,000s, and retail sales down.

So, stock markets are going up like a roman candle, but Americans are losing their jobs and their homes rapidly, and spending less and less.

Granted, the market looks ahead, and all that, but do we really like what we're seeing?

Aug 13 08:50 AM

[doubleguns:]

Maker sure your shifter is not in "R" before you feel good that the worst is in the rear view mirror.

Aug 13 09:13 AM

[Dr. O:]

I put "worst" in quotations to mean that we've emerged from a global credit freeze and economic bust for now, but another leg down, either as a "W" or an "L" with the the bottom of the "L" going down, is still very much on the table.

Aug 13 09:18 AM

[fjd10595:]

The market is up on 'thin air', that is all I can say. I am short the broad market here, and a bit below here, and holding. I see no reason for the market to advance from here.

Aug 13 09:26 AM

[robert.b.fe...:]

Welcome back Dave. No you didn't miss anything the market is going up on good new, bad news and no news. Keep your stops tight and your reserve cash in gold.

Aug 13 09:27 AM

[AndrewBaker:]

Remember me? I was the guy who predicted XLF down to $10 when apart from one close at $13 in May, it fell back and failed to beat $12.50 despite a few attempts. When it did get through at the end of July, I was holding FAZ! (and SDS): well, telling it like it is is one thing, but losing because of it is another. I'm now in FAS, SSO and XLF. Forget fundamentals: watch the trend and go with it

Aug 13 09:30 AM

[the humble ...:]

David,

Are u seeing a reverse head and shoulder for Rimm over the 22 MA or am I seeing things?

Aug 13 09:38 AM

[David Fry:]

I see dead people.........

Just kidding. I think the 22 period should offer support on a weekly closing basis for RIMM.

Aug 13 09:48 AM

[Alex Trias:]

Thanks Dave. Two questions to add.

One: IWM is a leading indicator for the US market, and as you point out, we're in a gap. So, what's the leading indicator for IWM? International? The charts show how many of the more volatile international ETFs have already pretty well filled up their own respective gaps. Does that suggest a similar fate awaits IWM, and if so, the rest of the US market? Time will certainly tell.

Two: Does IFN tell us the whole story in India, or is the message garbled by factors intrinsic to the fund itself? For instance, this fund is trading at a 13% premium to NAV. Granted, India equities are tough to access, so I could see an argument for at least some premium, but 13% looks expensive to say the least. I wonder whether the drop in IFN has something to do with valuation? Another factor at play is that the fund rights issued to shareholders expire soon - IFN might be dropping due to ex-dividend considerations?

I don't know what's the real driver behind the sudden deterioration of IFN - but to track India, why not use an India ETN like INP? Is credit quality of the issuer a reason not to use INP as the baseline for your technical analysis?

Thanks!

Aug 13 10:05 AM

[David Fry:]

INP is under restriction, last I checked, from issuing new shares. Therefore, even institutions can't short it if they wish since new shares can't be issued.

As to what's going on specifically with IFN it's just at a really high altitude and moves around in large chunks. The premium is high and caused by the very sharp run-up in that market post the recent election.

As time passes I may shift to other ETFs but for now I'll stick with IFN as the government makes ETF/ETN and closed-end funds the same in some respects given share issuance restrictions.

Aug 13 10:27 AM

[Alex Trias:]

Very good points. Thanks, David.

Aug 13 11:39 AM

[corey mendel:]

Welcome back Dave. Thanks!

Aug 13 01:37 PM

[sheople:]

Dave, If the feds are going to stop buying bonds, who is going to buy them? 2nd question is if our economy is to rebound, what is to be the driver? Our manufacturing has been shipped overseas. Are we to sell each other chinese made products, or just do service work for each other? I don't understand how the recession can be over. Maybe it's coming to an end and a depression is to follow?

Aug 13 05:26 PM

[Shortstick:]

Agree. Do not understand how issuing enormous Debt creates real wealth. Given the situation re: The Administration and it's partners in Congress, I do not see a fundamental and sustained revival any time soon. But then, the Markets are not logical, are they.


On Aug 13 05:26 PM sheople wrote:

Our manufacturing has been shipped overseas. Are we
> to sell each other chinese made products, or just do service work
> for each other? I don't understand how the recession can be over.
> Maybe it's coming to an end and a depression is to follow?

Aug 13 06:25 PM