Wednesday Outlook: Commodities, Global Markets

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We have quad-witching ahead and some of today’s action is no doubt linked to getting out of the way and manipulation with options and futures. This evening expiring September S&P futures are down a lot with rollover to December no doubt occurring. These are the types of the things that HAL 9000s live on.

There’s plenty of momentum for bulls and there are times this does seem unstoppable. Funny thing, sometimes this is just when things get upended.

One thing markets like is Washington gridlock and the most overexposed president in history is helping with it. He might do a little better if he gave us and his teleprompter a break. That’s just my opinion.

Let’s see what happens.

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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

[Mark Bern:]

As usual, a very good overview of the global markets and sectors. The market does seem unstoppable, however, as you point out, these are the times when markets can be upended. I'm not making a prediction, either. I do think the market needs a catalyst of some consequence to change its direction at this point. After all, there really doesn't seem to be much of a connection to fundamentals any more. This seems to be a good time to be a technical trader. If you understand what HAL is most likely to do you just need to stay one step ahead of the program.

Well, duh! I suppose that is your point for taking profits, isn't it? Thanks once again for the comprehensive summary of the day's action.

Sep 15 11:22 PM

[Pau:]

A basic summary for anyone paying attention. Where is the insight, David? Nothing here, really.

Sep 16 12:06 AM

[SeeTheLight:]

It is very easy to want to take profits in a market like this, as an underlying awe in the disconnect with fundamentals lingers in the back of everyone's mind.

Personally, I took profits in late August fearing a September crash that has yet to materialize and have been largely on the sidelines since then (except gold / silver and a small position in UUP as a hedge).

The hypothesis that September would result in increased trading failed to materialize (so far) and leaves me with the question - What now?

Sadly, against my true feelings, I feel one must be positioned neutrally in this market, so I will gingerly start picking up my long positions again, and will probably drop my UUP hedge.

Fundamentally, I remain convinced that this is just a bear market rally and sooner or later we will return to the mean, but in the near near term I see little catalyst to prevent the HFTs and trading desks flush with near free government cash from continuing to bid the market up. Clearly this has nothing to do with fundamentals which remain awful but banks are not lending but rather are "investing". A rising tide (of liquidity) lifts all boats and one must respect that (even if one knows the tide will eventually go out again).

Further to this effect, the fact that the Fed did not even mention the dollar (save for some passing remark from SF Fed Jen Yellen) tips their hand. It leads me to believe that they will do everything in their power to prevent deflation and will meekly accept stagflation instead. I do not have any confidence that they will succeed long term, but short term to bet against them while they are still trying is pure folly, so I will return to a more neutral stance and pick up some longs that I feel have a relatively good risk/reward.

Good Luck all.

Sep 16 02:12 AM

[Dr. O:]

I agree Dave. The US Dollar is the sacrificial lamb in the "rescue" of the financial system and the economy.

Sep 16 08:03 AM

[Alex Biggs:]

Pau, your comments contribute nothing to the conversation and are pure ka-ka. Sadly, the only one you are following is Nick Gogerty. Is that you per chance? Get lost.


On Sep 16 12:06 AM Pau wrote:

> A basic summary for anyone paying attention. Where is the insight,
> David? Nothing here, really.

Sep 16 09:08 AM

[Katzlou:]

SA default settings in place. Way to go Nick Gogerty.


On Sep 16 09:08 AM Alex Biggs wrote:

> Pau, your comments contribute nothing to the conversation and are
> pure ka-ka. Sadly, the only one you are following is Nick Gogerty.
> Is that you per chance? Get lost.

Sep 16 09:39 AM

[Bill L.:]

Pau, it's extremely ironic that you accuse the author for not contributing anything when you have no entries, articles, and only a a handful of negative comments.


Dave, thanks for you contribution, I always check you articles in the morning to see if I've missed anything, thanks.

Sep 16 09:42 AM

[James Tannery:]

David,
Thank you for taking time to post your thoughts on a daily basis.

Sadly, the stockmarket these days does not reflect economic reality one bit. After it was hijacked by the likes of Goldman Sachs it has completely decoupled from mainstream economy.

Sep 16 10:33 AM

[samretlew:]

Thanks David,
Very encouraging material. Remember folks, before the crash, nobody thought that the party might suddenly be over. Now, one is starting again, and everyone thinks that it is a mirage or hallucination. But of course, it's real---until it ends again. Folks, the psychological aspects of the market are usually bigger, stronger than the fundamental aspects. The market shouldn't have crashed as far as it did, or previously should never have gone up as far as it did, or should it? If a person wants to make money, and I certainly do, than he or she had better learn how to read the psychological element that drives the market: it's either fear or greed. No doubt, currently greed is the driver. That's why I have been in the market one hundred percent since the end of March. I will get out when my exit strategy tells me to, but not sooner. Yes, the market will always be a gamble; that's why investors/speculators/... need an edge that is sound and proven. Having such an edge or strategy will tilt the probability of success in your direction. Don't start guessing because emotions will get the better of you. Good luck trading.

Sep 16 12:26 PM

[sacking:]

As I said previously, went to the mall and saw many people shopping at crate and barrel, pottery barn etc. Then home depot was crowded as well. Maybe it's just the people not impacted by the recession that were buying, but with back to school etc, maybe people are tired of being tired, and decided to go shopping. For awhile now, we've heard that we're bottoming, and not falling as much as we were last year. Well, bottoming is better than falling.
Retail sales were better than expected, and the market is moving higher. For a longtime I've used VNQ (real estate etf) as an indicator. If it's going up, the market's going up. It broke through 40 early this week. Thanks Dave for all your insights. I check your commentary first thing in the morning. Of course, being on the west coast, many get here before me.

Sep 16 12:54 PM

[unfaire:]

My guess is that computers or Hal 9000 whoever they are are targetting someone who have to buy. That someone is probably 401k. There, money is still coming in and they have to buy something. With a thin market, Hal can nearly buy up everything before the mutual fund make their moves. With this scenario the market will keep on going up to no end until Hal is reprogrammed to make money on the way down at a certain level. DJIA at 10,000? 12,000? 14,000? Or, when we all jump in with our two feet. That is the biggest guessing game in town now. Recession is over? Who cares! Look, someone is hording all this stocks now. They just sit tight and watch their valuation go up until one day when they think enough is enough and jump out of the market for something else with better return.

Sep 16 02:32 PM

[376602:]

Bear market rally. US will see inflation and deflation at the same Time.
Equities will go higher... stop losses will be useless!

Sep 16 03:57 PM

[corey mendel:]

Haters in the house. FYI, Dave does this for free. Just saying.

Sep 16 05:14 PM