Friday Outlook: Commodities, Global Markets 31 comments
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It took awhile to post tonight given a visit from the Comcast (CMCSA) Gods. They had me shut down for a few hours but all’s well that ends well.
As to the equity markets you’re seeing a liquidity, peer pressure and low interest rate-driven buying panic. It’s just that simple. But, somewhere down the road authorities will have to throw some cold water on this. (I see Bernanke is speaking tonight telling all that the Fed will raise interest rates when the economy improves. That may give a chill but he no doubt watched the reaction in Australia where raising interest rates had little effect on bulls.) When, is anyone’s guess since it will have to come from “worse than expected” economic and earnings news.
A most misleading ETF was just launched by Jefferies & Co., CRBQ (Thomson Reuters/Jefferies CRB Global Commodity Equity Index Fund) which, according to its sponsors and promoters, seeks to challenge direct commodity ETF investments. You’ll note in the mouthful description the operative term “Equity” which describes its holdings. It consists of companies whose basic business consists of commodities versus direct investments as currently done by DBC (PowerShares/DB Commodity Tracking Fund) among others. The spin is that you’ll do better with these than with complex commodity holdings and so-called confusing issues such as contango and contract rollover. While not saying so, the sponsor indirectly seizes on recent negative publicity surrounding the CFTC’s actions regarding commodity contract limits for ETFs like DBC.
Certainly, when stock markets and commodity prices are rising, the beta from stocks will provide a better return unless using leveraged issues. It’s also true that you could accomplish the same thing by just buying a handful of current ETFs like MOO, XLE, XME, XLB and GLD to name a few.
Let me remind investors that in 1987 when markets dropped, gold prices soared but gold stocks dropped like a rock with everything else. Why? Because they’re just stocks. Remember that when dealing with CRBQ. If both equity markets and commodity prices are rising, CRBQ will do quite well (as will the other ETFs cited). However, if the overall equity market enters a corrective or bear phase even as commodity prices rise, CRBQ may do poorly because, again, the constituents are just stocks.
I found associated interviews and news articles heralding the release as highly misleading and misinformed. Frankly, those pissed me off!
Okay, enough of that rant.
The movers, already a week late, come tomorrow. This will put us in a sea of boxes and the associated mess.
Let’s see what happens and in the meantime you can follow our comments on twitter.
Disclaimer: Among other issues the ETF Digest maintains positions in: VTI, XLF, IEF, TLT, UDN, GLD, DGP, EFA, EEM, EDC, EWC and XPP.
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.
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This article has 31 comments:
Unless of course they want asset price inflation and dollar depreciation, which is a handy cure for $11 trillion of government debt.
It's pretty clear that this an easy money rally with trading desks leading the charge. Unfortunately for even the most astute retail investors, the first major signals that the easy money is coming off the table likely won't be as visible as an interest rate increase, likely it will be something more subtle like the Fed cutting back on some its under the cover lending programs. And of course it will be lost in the endless spin jobs being spewed out by the MSM.
This is why this rally is so dangerous. It's too profitable to be sitting on the sidelines but at some point someone is going to inform all the trading desks that one of these "buying opportunity" dips is really a feint and then back half of the "W" will begin. Trade carefully and make sure you have a reserve of cash or have some downside protection.
Good Luck all.
In the world of fantasy....
Nobel Peace Prize 2009-- Barak Obama--for his outstanding accomplishments in....? National debt? Declining US influence? America reverting to the mean?
Previous American Nobel Peace Price recipients:
Al Gore: for bringing attention to global warming at a time of global cooling.
Yassar Arafat: for walking away from a US brokered final peace deal that gave the Palestinians everything they wanted except the destruction of the state of Israel.
Jimmy Carter: for brokering a deal with the North Koreans to halt their nuclear program, a few years before they developed nuclear weapons.
Stop the world I want to get off.
so much has changed, so much has stayed the same ... toothless regulators will do nothing ...
too much of an accommodating policy by Washington will keep bankrupt banks in business ...
the only real losers will be those retail investors who actually need the markets to work correctly to fund their retirements ...
oh well ... the game continues ...
Typo? I think you mean to write "GDX" where you've written "GLD."
You no doubt recall the Plaza Accord (9/18/85) and the 50% devaluation of the USD over the next two years or so. You probably also know that from that date to the 1987 mini-crash, the S&P500 rose almost 90%.
It may be instructive to see how 'throwing the Dollar under the bus' (like Van Jones, Acorn, Gov. Patterson, gay & lesbian supporters & maybe Afghanistan soon enough) could serve this Administration's craven & narrow interests in the short-term.
The Plaza Accord was a BOON for Wall Street, almost immediately. Can't see why they might sacrifice Uncle Buck, again?
The good thing is, I'm getting more time to do other things now as my market activity is much reduced and mainly consists of watching and waiting.
On Oct 09 07:01 AM Diogenes of Sinope wrote:
>
> Previous American Nobel Peace Price recipients:
>
> Al Gore: for bringing attention to global warming at a time of global
> cooling.
>
> Yassar Arafat: for walking away from a US brokered final peace deal
> that gave the Palestinians everything they wanted except the destruction
> of the state of Israel.
>
> Jimmy Carter: for brokering a deal with the North Koreans to halt
> their nuclear program, a few years before they developed nuclear
> weapons.
>
diogenes
You know nothing about anything.
Obama does deserve a Nobel. The current depression is 100% the fault of Bush and the Republican's in Congress. Moreover, the "boom" during the Bush years was tepid and jobless. Obama has saved the US from total destruction.
Arafat. The Palestinians, the indigenous inhabitants of Palestine were offered NOTHING. They were offered a bunch of tiny Bantustans on 10% of Palestine, each separated from the other by huge walls. And with no adequate sea port or air port. Moreover, they would not even have been a sovereign state, since they would have been permanently disarmed. And the Israelis would have continued to steal their water.
The aggressors would have continued, as they have continued, the treat the people they stole Palestine from far worse than anyone in human history has ever treated the aggressor Jews.
Thanks to AIPAC and other enormously wealthy treasonous American lobbyist that put Israel first and treat the US with contempt. Deserved contempt because the politicians in Israel work for what they (wrongly) think is in Israel's national Interest, while the Deomocrats and Republicans work for what they (wrongly think) think is in Israel's national interest, ignoring what is in the American national interest. I.e., Jewish-Americans and American politicians do not have a dual loyalty; they have only one loyalty--to Israel.
"Why didn't Obama win the Nobel Prize for literature? Answer: He wrote two books."
A reader explains the SPY candle at issue is a "bearish abandoned baby". You may research this at investopedia if you wish or put in your own views/comments/interpr...
I thank the reader nevertheless.
But David, for you to join the fray... come on. I get that you're a conservative and it's clear that many of your followers are as well, but as an Independent it just debases the discussion that I look to you for, which is unbiased technical analysis. I have no problem with your witty comments, and look forward to reading your analysis but please I ask you not encourage folks to head down that hole. I need to believe your interpretations of what's going on and what might be happening going forward. I don't want to start questioning your analysis as potentially colored by an ideological bias.
On Oct 09 10:22 AM Seeking Advice wrote:
> It's again frustrating for me how a normally great blog entry by
> you, David, once again gets brought down by ridiculous politics.
> Yes, politics and the economy/markets are tied, but please wtf does
> the US President wining the Nobel Peace Prize have to do with today's
> market action? Exactly, nothing. I suppose these blogs become a nice
> relief valve for some conservatives frustrated at finding themselves
> currently "out of power."
>
> But David, for you to join the fray... come on. I get that you're
> a conservative and it's clear that many of your followers are as
> well, but as an Independent it just debases the discussion that I
> look to you for, which is unbiased technical analysis. I have no
> problem with your witty comments, and look forward to reading your
> analysis but please I ask you not encourage folks to head down that
> hole. I need to believe your interpretations of what's going on and
> what might be happening going forward. I don't want to start questioning
> your analysis as potentially colored by an ideological bias.
The U.S. has the priceless advantage of having the world's reserve currency. If we abuse this, the future generations will suffer terribly. While the federal deficit has ballooned and the Fed's balance sheet has doubled, the ordinary person is facing high unemployment rates, lower wages and higher energy and food costs. The sector that benefits from all these bubbles is Wall Street and Goldilocks. I am neither liberal nor conservative..neither a supporter nor a critic of the Prez. All I am saying is there needs to be a little more balance and some prudence from the govt. Else, we will all pay for it in the near future.
On Oct 09 10:38 AM Cherotree wrote:
> My sentiments exactly! I love this blog and the analysis and insight
> that David brings to it and I recommend it often. But I don't come
> here to wade through politically ideological babble that has nothing
> to do with financial markets and investing. I am really surprised
> that David decided to dip his toe into this water in his extremely
> popular blog. Peace!
On Oct 09 07:01 AM Diogenes of Sinope wrote:
> Some lip service for the US Dollar, a pull back in commodity prices,
> but stocks hanging tough.
>
> In the world of fantasy....
>
> Nobel Peace Prize 2009-- Barak Obama--for his outstanding accomplishments
> in....? National debt? Declining US influence? America reverting
> to the mean?
>
> Previous American Nobel Peace Price recipients:
>
> Al Gore: for bringing attention to global warming at a time of global
> cooling.
>
> Yassar Arafat: for walking away from a US brokered final peace deal
> that gave the Palestinians everything they wanted except the destruction
> of the state of Israel.
>
> Jimmy Carter: for brokering a deal with the North Koreans to halt
> their nuclear program, a few years before they developed nuclear
> weapons.
>
> Stop the world I want to get off.
It may make sense -- or not -- but it sure ain't common since so many disagree about the stimulus issue. And as far as "sound economics"? I do believe that is an oxymoron.
David "The Fryguy is free to spout off in the comment section right?" is correct. This is his blog and he can comment as he pleases. Keep up the great work David! Now, back to the markets! Peace!
On Oct 09 11:05 AM Poor Texan wrote:
> Seeking Advice and Cherotree! Politics does affect the markets. Either
> we have "the invisible hand' of Adam Smith or business is run under
> the rules written by the 'czars'. When the czars get full control,
> investors will have no opportunity to determine where their investments
> will be placed. Ask the Chrysler and GM bondholders.
On Oct 09 11:56 AM Cherotree wrote:
> Politics do affect the markets but what effect does the awarding
> of the Nobel Peace Prize have on the markets (which started this
> dialogue)? None! Just look at the number of comments posted now as
> compared to normal. This is why I stay away from forums of a politically
> themed nature to avoid the squabbles. Up until now I did not notice
> it here.
>
> David "The Fryguy is free to spout off in the comment section right?"
> is correct. This is his blog and he can comment as he pleases. Keep
> up the great work David! Now, back to the markets! Peace!
Maybe everything gets a little distorted in Americaland? I don't understand why every on seeking alpha refuses to accept the fact that the world isn't ending. The rise in employment will come, in today's globalised economy the bulk of American employment will be a little further down the recession recovery cycle than countries like Canada and Australia.
Do you guys really think America is going to crash and burn while Canada is sitting there watching their unemployment decrease? Canada's biggest importer of its natural resources is America, by far. Why is our employment in this sector rising if America is burning to the ground?
A Canadian recovery is dependant on an American recovery. Employment is lagging indicator. Canada's employment is up. Both bears and bulls still talking about possibility of a jobless recovery aren't looking in the right place. Employment won't rise in America until it rises in countries like Australia and Canada, and it just did.
On the same day we have news of a 5x greater decrease in Canadian unemployment than was predicated and American unemployment claims hitting a 9 month low.
The decrease in American unemployment is gonna catch this entire website off guard. I can't wait to read about how it's actually going to be a sign of impending doom. Sorry for the sarcasm i just can't help myself.
On Oct 09 12:31 PM sacking wrote:
> I prefer technical analysis and comments. If I want political comments,
> I got Fox and MSNBC and CNN to turn to. No one does technical analysis
> like the Fry guy.
Politics is the distraction.
Honest and ethical politicians from either side who truly represent their constituents are like Unicorns; rumored to exist but no proof.
It serves their purposes to have the populace believe that supporting either side makes a difference. If the lower caste hyenas are fighting over who gets the best part of the carcass, the alpha hyenas get to eat first, and blame the other side.
It's a game, like lawyers joking about their clients over lunch and charging it to them; then pretending to hate each other in court.
On Oct 09 09:15 AM Dr Jan wrote:
>
> diogenes
>
> You know nothing about anything.
>
> Obama does deserve a Nobel. The current depression is 100% the fault
> of Bush and the Republican's in Congress. Moreover, the "boom" during
> the Bush years was tepid and jobless. Obama has saved the US from
> total destruction.
>
> Arafat. The Palestinians, the indigenous inhabitants of Palestine
> were offered NOTHING. They were offered a bunch of tiny Bantustans
> on 10% of Palestine, each separated from the other by huge walls.
> And with no adequate sea port or air port. Moreover, they would not
> even have been a sovereign state, since they would have been permanently
> disarmed. And the Israelis would have continued to steal their water.
>
>
> The aggressors would have continued, as they have continued, the
> treat the people they stole Palestine from far worse than anyone
> in human history has ever treated the aggressor Jews.
>
> Thanks to AIPAC and other enormously wealthy treasonous American
> lobbyist that put Israel first and treat the US with contempt. Deserved
> contempt because the politicians in Israel work for what they (wrongly)
> think is in Israel's national Interest, while the Deomocrats and
> Republicans work for what they (wrongly think) think is in Israel's
> national interest, ignoring what is in the American national interest.
> I.e., Jewish-Americans and American politicians do not have a dual
> loyalty; they have only one loyalty--to Israel.
It can be called an evening star, which is less bearish than abandoned baby and requires confirmation on the following day, which did not occur.
I have also gotten burned by paying too much to a tracking ETF's candlestick that does not closely match the underlying index. In this case the .SPX formation was just a normal white candle, which pretty much invalidates the SPY evening star formation.
Even Nison says don't go just by the candle, it has to be backed up by RSI & MACD or whatever. In addition, I've found that ETF index candles can be misleading if the ETF candle and underlying index candle don't match.
On Oct 09 10:13 AM David Fry wrote:
> Meanwhile, back to the markets:
>
> A reader explains the SPY candle at issue is a "bearish abandoned
> baby". You may research this at investopedia if you wish or put
> in your own views/comments/interpr...
>
> I thank the reader nevertheless.
But to paint all Jewish-Americans with the same brush is as inaccurate as any 'absolute'. However as the Pollard case (and the persistent efforts to pardon this convicted treasonous spy) illustrates many put Israel over US.
Finally re: US politicians, they are not loyal to Israel, they are loyal to AIPAC, or more specifically to AIPAC's money. But how can this come to any as a surprise? Go back to Rome and the efforts of a prospective senatorial candidate and his backers. Throughout the centuries, people are people.
Now politics circles back to technical analysis: People ARE people, and the panic buying born from fear of losing out (which is an even stronger emotion that pure greed) is showing on the tapes. But as long as 'Uncle Bucky' is sacrificed, the 'rising tide' will bail them out.
Fryguy: How will the Treasury find buyers for another, ANOTHER $1.5 TRILLION+ next year, plus the hundreds of billions of roll-over bonds??? Will a pre-meditated and coordinated 'crash' force global funds to the 'safety' of Uncle Bucky, in time for Geithner and Bernanke to foist another few weeks of $250 BILLION bond offerings?
On Oct 09 09:15 AM Dr Jan wrote:
> I.e., Jewish-Americans and American politicians do not have a dual
> loyalty; they have only one loyalty--to Israel.
The National Socialist Party in Germany (NAZI's for those of you in Rio-Linda) was, after all, a Socialist party.
Sad too.
There is no shortage of greedy people who call themselves Christians or Muslims or Buddhists or whatever; judge people as individuals and you will be one step closer to the path of truth.
On Oct 09 09:15 AM Dr Jan wrote:
>
> diogenes
>
> You know nothing about anything.
>
> Obama does deserve a Nobel. The current depression is 100% the fault
> of Bush and the Republican's in Congress. Moreover, the "boom" during
> the Bush years was tepid and jobless. Obama has saved the US from
> total destruction.
>
> Arafat. The Palestinians, the indigenous inhabitants of Palestine
> were offered NOTHING. They were offered a bunch of tiny Bantustans
> on 10% of Palestine, each separated from the other by huge walls.
> And with no adequate sea port or air port. Moreover, they would not
> even have been a sovereign state, since they would have been permanently
> disarmed. And the Israelis would have continued to steal their water.
>
>
> The aggressors would have continued, as they have continued, the
> treat the people they stole Palestine from far worse than anyone
> in human history has ever treated the aggressor Jews.
>
> Thanks to AIPAC and other enormously wealthy treasonous American
> lobbyist that put Israel first and treat the US with contempt. Deserved
> contempt because the politicians in Israel work for what they (wrongly)
> think is in Israel's national Interest, while the Deomocrats and
> Republicans work for what they (wrongly think) think is in Israel's
> national interest, ignoring what is in the American national interest.
> I.e., Jewish-Americans and American politicians do not have a dual
> loyalty; they have only one loyalty--to Israel.