Wednesday Outlook: Commodities, Global Markets

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So, INTC did well and IBM’s on deck. We’ll also get some Retail Sales data which must be good (if you don’t look inside the numbers) and FOMC minutes which will get dissected into all its minutia.

So, we go forward in this Twilight Zone environment replete with Alice in Wonderland logic. But, what the hell, we’re in for the ride.

Let’s see what happens and in the meantime, follow our pithy comments on twitter.

Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, UPRO, MDY, IWM, VTI, TYH, XLB, UYM, XLY, XLF, FAS, UDN, ULE, GLD, DBC, EFA, EFO, 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.

Comments

[SeeTheLight:]

I know I'll be selling the pop as we're quickly getting short term overbought again. As you rightfully pointed out, Dave, we seem to be in a rising wedge, but I feel this wedge will continue until the easy money comes off the table, until then sell the peaks, buy the dips. Fundamentally it makes no sense, but fundamentals went out the window a long time ago. It certainly pays to trade this market with discipline.

I continue to believe that this rally will persist until at least the New Year, not because it has any substance, but what else do the banks have to do with all the free money being thrown at them from the Geitner/Bernanke tag team. It's not like anyone is borrowing right now, the consumer is unemployed, underwater and plain flat broke and Big Business? Why would they borrow a cent when they can just do a public offering instead. Like the Dire Straits said, "get the money for nothing and get the chicks for free".

So the banks will continue to push all that free money to their trading desks and bid the market up. If you were given a blank check and some loaded dice, wouldn't you gamble too? Too bad all this nonsense is doing nothing to help the underlying economy and it will all have us all in deeper dire straits sooner or later. As the Chinese curse goes, "May you live in interesting times". They are certainly interesting.

Good Luck all

Oct 14 06:30 AM

[rick12345:]

JP Morgan did beat estimates by 33 cents after all. Not bad really.

Oct 14 07:48 AM

[Dr. O:]

Cash is trash. Can't beat those 0% interest rates!

Oct 14 08:01 AM

[ecoco:]

This is fun, earnings season is here to stay, and we have 20 trading days each with few BIG CAP earnings to "IMPRESS" driving the market UP by 1 to 2% each day.

Guess what??, we have 30% rally out of beating crappy earnings by a mere 0.5% terrific.

This brings me back to an old Burger Comercial with a big BUN but "WHERE IS THE BEEF", I mean the CONSUMER.

Oct 14 08:34 AM

[doubleguns:]

Its not the twilight zone any more, now its the "treasury zone".

Oct 14 09:08 AM

[jmward22:]

Good opening picture for this market ("Nightmare at 20,000 Feet", 1963, William Shatner). Makes me wonder if this squirrely market is real or just in our heads 8<; .

Oct 14 09:40 AM

[bottoms-up:]

Interesting how JP Morgan beat estimates, yet the same suspects are usually the most active...

CITIGROUP INC
BANK OF AMERICA
SPDR TRUST SER 1
SPDR-FINL SELECT

As someone pointed out on SA, the volume on a few would make one think they discovered cancer...

Oct 14 10:18 AM

[bottoms-up:]

Correction to above: Should be the CURE for cancer...

Oct 14 10:22 AM

[mtp:]

they're the ground beef


On Oct 14 08:34 AM ecoco wrote:

> This is fun, earnings season is here to stay, and we have 20 trading
> days each with few BIG CAP earnings to "IMPRESS" driving the market
> UP by 1 to 2% each day.
>
> Guess what??, we have 30% rally out of beating crappy earnings by
> a mere 0.5% terrific.
>
> This brings me back to an old Burger Comercial with a big BUN but
> "WHERE IS THE BEEF", I mean the CONSUMER.

Oct 14 10:48 AM

[ebworthen:]

Banks rallying on the backs of the taxpayer (consumer) - woo-hoo!

Twilight zone and hookah smoking caterpillar indeed.

Oct 14 11:05 AM

[AndrewBaker:]

Yes, Twilight Zone and One Step Beyond live. What is it about "overvalued" that so many do not understand? Are there that many fund managers working their bonuses that they can keep this market rising by buying it with other people's savings? Seems so ... and with phantom advisers getting a cut too, it's not difficult to see how they can get away with it.

Oct 14 12:09 PM

[sacking:]

Dave
Always appreciate your charts and insights. Just wondering if you could look again at either HYG or JNK for the high-yield bond etf. Just wondering about your insights in comparing them to the other bond etfs you follow.
Thanks

Oct 14 01:02 PM

[absolute re...:]

I agree with you David. I was watching CNBC this morning as always and they can twist anything into a positive. This dow 10,000 and the trillion $'s on the sidelines that "might" come in if only the market headline is Dow 10,000 was a bit too much for me to take. I don't know many professionals who have the Dow 10,000 indicator just waiting to break so they can jump into this market. I am concerned with valuations and who couldn't beat the numbers from last year. As always I struggle with knowing market direction and appreciate your insite and the others I follow. Michael Johnston had similar views this morning and this one from David has the same suspecting view of these "beats" of estimates. seekingalpha.com/artic... Keep up the great work and appreciate all you do for us investors.

Oct 14 02:03 PM

[ecoco:]

WHERE IS THE BEEF link

www.youtube.com/watch?...


On Oct 14 08:34 AM ecoco wrote:

> This is fun, earnings season is here to stay, and we have 20 trading
> days each with few BIG CAP earnings to "IMPRESS" driving the market
> UP by 1 to 2% each day.
>
> Guess what??, we have 30% rally out of beating crappy earnings by
> a mere 0.5% terrific.
>
> This brings me back to an old Burger Comercial with a big BUN but
> "WHERE IS THE BEEF", I mean the CONSUMER.

Oct 14 04:03 PM

[rpgpa:]

"Too bad all this nonsense is doing nothing to help the underlying economy and it will all have us all in deeper dire straits sooner or later"...true see the light but in the mean time Wall street is the tail waggin the dog. If chuckie American Idol watching consumer hears its good., do they have enough brains to second guess?

Oct 14 05:53 PM

[ebworthen:]

No.

And I think that is the point, as sad as that sounds.

They want chuckie american idol watching consumer to keep buying.

After all, there are enough police and accountants to take away all their stuff and sell it down the road for more profit, no?


On Oct 14 05:53 PM rpgpa wrote:

> "Too bad all this nonsense is doing nothing to help the underlying
> economy and it will all have us all in deeper dire straits sooner
> or later"...true see the light but in the mean time Wall street is
> the tail waggin the dog. If chuckie American Idol watching consumer
> hears its good., do they have enough brains to second guess?

Oct 14 06:11 PM

[rick12345:]

It may not be doing wonders for consumer spending, but I can assure you, it is doing wonders for the bottom line GDP. It also means they can pay back some of the $700 billion that was borrowed from the treasury.

Oct 14 09:15 PM

[Dr. O:]

My brief earlier comment about cash is trash with 0% interest rates was poorly received. Many thumbs up for the commentators still shorting the blips instead of buying the dips. Trends are powerful things and once entrenched it takes something big to reverse them.

Lots of things could pop up to derail the current trends, but, so far, not much. Just "stuff to worry about." The intermediate term trends where the big money is made are, of course, a lower dollar, higher commodities, and higher stocks.

That trio exploded again today. And US cash literally is trash as the dollar seems to go down day after day.

Disclosure: long SSO, QLD, GLD, SLV, USO, UDN. I foolishly sold FXI and EWH Monday (doh!). Lots of good stuff is too overbought for my tastes just now including EEM, FXA, FXC, EWA and EWZ.

I agree with the ubiquitous bears on these boards that the US economy is a shambles and our fiscal policy is a disaster, but, how do you PLAY that? It's showing up in a collapsing dollar, pushing up commodities and stocks world wide. A new bubble is quickly forming in stocks, and commodities, but I think this bubble will be a whopper and has a good while to go. May as well make some money.

Oct 14 09:39 PM

[bluebare:]

Nice ultra dice Dave. Yo gusto su cohones.

Oct 14 10:45 PM