Tuesday Outlook: Commodities, Global Markets

<< Return to page 1 - Bulls Remain in Control

Volume is light and bulls are still in control. Selling good, bad or indifferent news is not permitted. Further, we’re heading to the end of the month and tape painters will be actively defending their positions. More news will be forthcoming tomorrow including the Redbook, more home sales data and Consumer Confidence. Then there's Durable Goods on Wednesday coupled with the Beige Book. Then it’s Jobless Claims on Thursday and Friday brings GDP data. All this data plus the end of the month takes us to August, believe it or not.

Is this market like any in the past? The closest is 1974 but then there were major differences. As a pure chartist, you just view the data but what’s behind it all? So many things are different, especially the players and instruments in markets. The Fed is more involved, the derivatives market has grown exponentially, trading costs have been whittled to nearly nothing, indexes have been revamped and new ones created, hedge funds and trading desks dominate markets with the latter not existing previously due to Glass-Steagall Act prohibitions and the former barely a blip on the radar, global investors were much less present as were global markets, mutual funds weren’t much of a factor, computers didn’t dominate trading and so forth. A lot has changed with many facets of the market. Drawing comparisons is a tall challenge.

Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, SSO, MDY, IWM, TBT, BWX, UDN, EFA, EEM, EWY, EWW 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:]

Thank you for my favorite quick take on the markets. Can I add a couple charts to the suggestion box? FXA. The Aussie closed at multi-month highs yesterday. Overnight, on news, the Aussie shot up another cent against the USD. Also, silver may be range bound, but, it has some room to run on the upside, unlike gold, which either has to break out or do nothing. How about a look at SLV?

Jul 28 06:24 AM

[User 179747:]

If you had dropped into a chart room from space and were presented with the above charts, you would have to be bullish. And same with a multitude of individual stock charts. Can you show us an example of similar times/charts where the tea leaves were wrong/reversed in short order? Or does that require an event of semi- cataclysmic proportions?

Jul 28 07:12 AM

[JGL:]

Can you expand on your comments on EEM? How di you get to these values (red boxes)? Do oyu mean that if it goes beyond ca. 38.5 (top red line) a reversal is expected??

Jul 28 08:20 AM

[AndrewBaker:]

We're going nowhere until after August has come and gone, unless some bad news causes a fall before then. There will be no good news to cause much more of a rise, that's for sure.

Maybe with the dollar going south, some solice may be found in long commodities including gold, silver, agricultural softs and perhaps oil. Somewhat boring right now, methinks.

Jul 28 08:32 AM

[rap:]

sorry David; can't follow your market synopsis anymore.

in the past 6 mos of the market rebound, you maintained a bearish posture; as a trader anyone who followed your lead would have missed an incredible move. the amazing thing is you still question the bulls.....

the charts are nice, but when it comes to trading, you offer no real insight at all into market direction and when turns are likely, only some criptic one-liners that seemingly few understand.

great for classroom lectures, bad for trading.

best to you.

Jul 28 08:44 AM

[The Economi...:]

agreed.. this dude is flat out wrong.

Jul 28 09:14 AM

[robert.b.fe...:]

Great job David. I liked the insight into the Dow being irrelevant as a tool right now because it had to be "Fixed." after some notable components went south. Like many on the boards here I have been geting longer in commodities (SUG) (FEED) because of the weak dollar and seasonal considerations. Tech still looks pretty good going forward as well. Good luck all.

Jul 28 09:14 AM

[the humble ...:]

The question is not who is right or who is wrong at any given earlier time, it is how the future will unfold. If you want to see where we are headed you have to at least know where you are.

Thank you David for providing us with a tool that helps us see where we are.

Jul 28 09:39 AM

[What's wron...:]

EconomicJoker and rap:

David is a cynic but not a bear. Agree with the Humble Scribe. Reading the disclaimer he provides may be an excellent starting point. Sounds like you regard yourselves as rocket star traders with excellent performance returns? Good luck. That can only mean we'll see less of you on this column.

Jul 28 10:44 AM

[Surly Trader:]

With European banks teetering, Japan overleveraged with little internal support from a changing demographic, the UK continuing a housing slide, the US starting to feel the CRE pain....I think it's prudent to be cautious. The markets do not tell you the whole picture because if they did, we wouldn't have seen a 40% slide in the first place. There is a lot to work out in the world so I do not think it's simply bull versus bear. I do think that volatility will come back as we start to unravel the whole mess more completely and that will mean periods of strong pullbacks.

Jul 28 11:23 AM

[sacking:]

Good bye and good luck to those who want to leave. I want to see the charts and comments by David, not by you anyway. If you're that good of a trader, what are you doing here?

I appreciate Dave's comments and insights. Brazil is a great place to invest. I got ILF and EWZ.

The long-term

Jul 28 11:35 AM

[sacking:]

cont.
will be more interesting. What happens if the green shoots don't appear? How hard and fast do we fall? If this "recovery" stumbles, the fall could be worse than last October. Let's hope the powers that be know what they're doing and can keep the ship afloat.

Jul 28 11:37 AM

[RiskReturnO...:]

Double dip recession is very likely scenario -- starting with today's consumer confidence number. With unemployment still rising and housing prices providing no equity withdrawals, consumers have no choice but push the savings rate up to 10%. The next leg up in savings rate will depress GDP just enough to offset any production increases and inventory rebuilding. Economists are getting too comfortable with calling the end of the recession ... equity market is smarter and will start correcting to reflect double-dip sometime in 2010.

Jul 28 12:04 PM

[Parameshwaran:]

ECH & EZA made the earliest bottom. Now they have topped exactly @ my targets. (ECH - 48.30, EZA - 51.40 ). S&P 500 i guess has the fulel to reach 1020 as the VIX stays lower.Now i like to follow ECH & EZA to forecast repricing of markerts on either side . Any similar bets ?? . opinions please.

Jul 28 02:40 PM

[robert.b.fe...:]

I picked up (VIV) and (NETC) quite awhile back they haven't met expectations yet but I have time to wait and they are in a growth market long term.


On Jul 28 11:35 AM sacking wrote:

> Good bye and good luck to those who want to leave. I want to see
> the charts and comments by David, not by you anyway. If you're that
> good of a trader, what are you doing here?
>
> I appreciate Dave's comments and insights. Brazil is a great place
> to invest. I got ILF and EWZ.
>
> The long-term

Jul 28 03:50 PM

[Belome:]

God I love this guy, after a long hard day battling HAL I can sit down with a double scotch and get right with the world. David keep up the great work, if a few retards take your cynicism for market advise then they need to get off the phone selling Shamwow's or whatever they do and get a sense of perspective. Agree or disagree lets check portfolios next year and see how you did....punks.

Jul 29 12:36 AM

[thechaser:]

In response to Rap and some of the other posters, Mr. Fry is not bearish. His "one-liners" and other comments refer to the simple fact that the degree of manipulation and micro management of the markets accessible and visible to the public has reached a zenith. What he calls "Da Boyz" I call the ruling elite and their daily work can be seen in a myriad of ways. The panic mid Feb President's Day selloff was orchestrated in a manner befitting a world class symphony. Valuations were reasonably in line with earnings expectations but the crescendo of the end is here and near reached deafening proportions only to offer up to "Da Boyz" one heck of an opportunity that had run its course by the end of March only to see the G group recap the banks with 85 bln out of thin air. How about the July 1 pop followed by the Independence Day "Dump"? Of yeah, let's see, IBM managed to somehow find $25 billion in market cap in a couple of weeks and magically retain that sparkling 117 level to within TWO CENTS today given another glorious stick save as Mr. Fry calls them or spike closes as I do.
I endorse Mr. Fry's continued tongue in cheek and hope that he has the stomach to see it through for a while longer. And by the way, the Great Recession is now over on the backs of those towering green shoots and be prepared for the end of next week's Oh My God, We Still Have A Long Way To Go and the TTM recap of Geez, 18+0+10+11=39 and maybe 75 for the next 4 Q's is pushing a little too much (BTW, those numbers are not actual accnting earnings, just the MM 'operating' earnings). And hey, remember, "WE" do not want any of those inverse ETF's cluttering up the innocents' portfolios for the dialed in "easy button" August swoon. Then time for a post Labor Day pop only to see the dreaded Octobers of our futures gleeming as yet another punk Q comes and goes. Yeah, heck of a market ain't it.

Jul 29 09:13 PM