Friday Outlook: Commodities, Global Markets

<< Return to Page 1 - Can't Kill the Beast

Smoke and mirrors on the ceiling? Champagne on ice? You just can’t kill this beast? We’ll see, but hey, let’s have some fun with it.

Tomorrow is the end of quad-witching. Despite a little sell-off today, markets remain much overbought as we head toward the end of September when, theoretically, tape painters will come to the fore.

Markets are priced to perfection as goes the old maxim. But, no matter the bad news - we still seem to be able to keep selling contained. The funny thing about data like Jobless Claims is that we’re still losing a lot of jobs even though they’re less than some pinheads predicted. But that’s the market we have.

Let’s see how they close things out tomorrow. You can follow us on twitter here.

Disclaimer: Among other issues the ETF Digest maintains positions in: XLB, XLI, IYR, IEF, TLT, UDN, GLD, DBC, USL, XLE, DBB, EFA, EEM, EWJ, EWC, EWZ and RSX.

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:]

Another Eagles song....

"Life in the fast lane
Surely make you lose your mind
Life in the fast lane, everything all the time
Life in the fast lane, uh huh
Blowin' and burnin', blinded by thirst
They didn't see the stop sign,
took a turn for the worst."

Sep 18 07:07 AM

[tunaman4u2:]

Thats great work Dr. O


On Sep 18 07:07 AM Dr. O wrote:

> Another Eagles song....
>
> "Life in the fast lane
> Surely make you lose your mind
> Life in the fast lane, everything all the time
> Life in the fast lane, uh huh
> Blowin' and burnin', blinded by thirst
> They didn't see the stop sign,
> took a turn for the worst."

Sep 18 08:03 AM

[ray b:]

I vote for a peaceful easy feeling.

Sep 18 08:10 AM

[conceptwizard:]

From TD at ZH.

Keep in mind, in May 2008 there were MANY people we will not name who thought we were headed right back to the highs, so sentiment is not really prophecy and far from it in fact. This time it's different though... bears and reality are fighting the US government and its arsenal of liquidity. That's why we can have the market diverge so much while making new highs with indicators screaming "overbought". On top of it, while some time has been bought pulling the SFP bill program in order to debate the possible raise of the debt ceiling, should the Fed and the Treasury succed and have it raised we can't exclude more quantitative easing and hence more money being poured into the markets. I guess an hyperbolic collapse of the USD would then be the most likely outcome to bring back markets to reality. In the end, bonds mature, investors have to either be repaid or then default occurs, and there are a lot of maturities and mortgage resets rolling down the pipe. So given that the ISM is about to top, QE money is running out (we are below $15Bn remaining out of $300Bn or just about), and many stimulus programs are running as well, headwinds could start being felt again. Barring more US government intervention it is likely that recent exhuberance will come to an end sooner rather than later. However as always one must remain cautious because these days capital markets are a mere reflection of government action... as long as government remains unchallenged.

We are walking the tightrope on a windy day.

Sep 18 09:22 AM

[SeeTheLight:]

Monday might be interesting. Obviously on an options expiry day there is no room for reality. Everyone should be taking this market day by day. I am. Sure we are in a liquidity driven bubble here but I'd like to note the following:

In 1930 the DOW rebounded 48% off the lows without the magic printing press running at top speed (and buying treasuries in a loose attempt to convince us that the Fed is not monetizing the debt). But this time, the Depression-learned Bernanke has it all figured out, he's determined not to make the same mistakes they made back then, he just wants to make bigger ones (albeit in the opposite way).

Our savior Helicopter Ben, is going to build the biggest bubble ever and do it with the Lender of Last Resort (so there will be no one left to bail us out when it bursts). Sure we have retraced 60%, but if this turns out to be the biggest bubble of the them all, it could go much higher. And of course, if he succeeds, the following crash will make the great Depression look like a mild hangover.

But as I said in previous posts, you would be silly not to profit on the way up and the way down, as well as being prepared for the moment that the music stops (QE stops) because it won't take long after that to get new Everyday Low Prices.

Good Luck all.

Sep 18 09:52 AM

[LKofEnglish:]

I prefer Led Zeppelin myself and in particular "the Song Remains the Same." It started with the banks and I still don't see THAT changing. At the end of every week it's "bank failure Friday." Love the charts but that's the reality of these so called "policies." In other words sure the stock market is doing great--will we ever have a banking system again tho? So far I haven't seen a single government policy that say it has any interest in creating a viable banking system on a commercial scale and in fact ALL I see is the exact opposite. To "Bring it on Home" then the question is "will Wells Fargo fail tonight or not"? Lord knows Sheilia Baird, Treasury and the Fed are all yelling and screaming at each other about "what to do with that one." TAXING indeed.

Sep 18 10:59 AM

[carey_jim:]

Another thing about the Great Depression, which few outside the economics profession seem to know, is that the monetarist view of the cause of the Great Depression (not enough money injected into the economy) is simply one theory made popular by Milton Friedman and his school. It is NOT universally agreed upon by the economics profession that tight money was a major cause of the G.D. or prolonged it. It is simply the most popular modern theory in which Ben is a near fanatic believer. In fact, it might be wrong or only partially correct. As with all theories, we will find out by looking at actual results in the real (financial-economic) world that we all live in. But whatever the outcome, pundits will always spin the tea cup so that the financial tea leaves confirm their theories, whatever they are ;)


On Sep 18 09:52 AM SeeTheLight wrote:

> Monday might be interesting. Obviously on an options expiry day there
> is no room for reality. Everyone should be taking this market day
> by day. I am. Sure we are in a liquidity driven bubble here but I'd
> like to note the following:
>
> In 1930 the DOW rebounded 48% off the lows without the magic printing
> press running at top speed (and buying treasuries in a loose attempt
> to convince us that the Fed is not monetizing the debt). But this
> time, the Depression-learned Bernanke has it all figured out, he's
> determined not to make the same mistakes they made back then, he
> just wants to make bigger ones (albeit in the opposite way).
>
> Our savior Helicopter Ben, is going to build the biggest bubble ever
> and do it with the Lender of Last Resort (so there will be no one
> left to bail us out when it bursts). Sure we have retraced 60%, but
> if this turns out to be the biggest bubble of the them all, it could
> go much higher. And of course, if he succeeds, the following crash
> will make the great Depression look like a mild hangover.
>
> But as I said in previous posts, you would be silly not to profit
> on the way up and the way down, as well as being prepared for the
> moment that the music stops (QE stops) because it won't take long
> after that to get new Everyday Low Prices.
>
> Good Luck all.

Sep 18 12:31 PM

[David Fry:]

How about "Tequila Sunrise"?

Sep 18 01:37 PM

[JD of OZ:]

Works for me as I enjoy a sunny Honolulu morning (Ko Olina to be exact).


On Sep 18 01:37 PM David Fry wrote:

> How about "Tequila Sunrise"?

Sep 18 03:14 PM

[legaleagle2004:]

That EEM data point I think was some idiot with a market order at the open. Shows up on my service too.

Sep 18 04:31 PM