Friday Outlook: Commodities, Global Markets

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We’ve seen more earnings leaks than usual and it goes without saying some have the number in advance of us commoners. So we get these “stick saves” toward the end of trading.

Other than Google, things are a little soft in after hours trading tonight. AMD reported and the stock got sold as did IBM.

click to enlarge


There’s quite a mania going on in Emerging Markets and some commodity sectors. This is driving prices to extreme levels (parabolic) making mincemeat of rational judgment. It’s mostly driven by peer performance pressure, excess liquidity, and low yields; but, still only modest volume. Most investors are still feeling the bitter pain of losses and seem reluctant to take Wall Street’s bait.

I’m a skeptic but willing to go with the flow since that’s my primary mission even if kicking and screaming.

It wouldn’t surprise to see more options related activity tomorrow as those on the options floor will be hunting down strike prices.

We’ll make a few pithy comments on twitter tomorrow maybe.

Disclaimer: Among other issues the ETF Digest maintains positions in: SPY,UPRO, RSP, TYH, IWM, MDY, XLB, UYM, XLF, FAS, XLY, UDN, GLD, DBC, XLE, EFA, EFO, EEM, EDC, 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

[Daniel Herkes:]

Thank you for the summary. You have an objective perspective as far as I can tell. When this bubble pops the other half of the W will emerge. It is just a matter of when.

Oct 16 06:41 AM

[Dr. O:]

The verdict has been rendered. The news is being sold. A short term top appears to be in. I will sell off my remaining positions today. I even let go of GLD and SLV yesterday noting the charts and price action.

Looks like we may be in for some "counter-trend" days: stronger dollar, weaker commodities, weaker stocks.

I find it useful to look at the charts of the double-short ETFs like TWM and SDS to get a feeling for how over-bought the market is. Or UUP for the US dollar. When those get too far over sold, obviously, and are too far below their 50 day SMA, its time for corrective action.

Oct 16 07:16 AM

[predictorma...:]

I think it's interesting the the banks are reporting big gains in trading commodities.

1. So that means we gave banks all that cash (and don't forget making their swaps good with AIG) so they could out and out speculate. We see the results.

2. If commodities reverse the bank profits go away.

3. The overall earnings so far don't look that great to me. Cut expenses, make more money even though you sell less. Now that's a real green shoot for business outlook.

I think it's correction time, but I also thought that twice before this year!

Oct 16 08:20 AM

[enigmaman:]

Investors (pros) are doing everything the can to draw in old and new clients, IPO email alerts are coming every few days now, (pros) are very anxious because they don't want to get backed in the squat and miss out on their bonuses, but Joe six pack is not buying this time around, they know from their vantage point it just doesn't feel right, so they stay in cash, bonds or coffee cans. So who is buying, I would guess the so called pros are buying from each other, so they can celebrate Dow 10,000n and short term profits. Funny when you think that main street is more in touch with reality then Wall Street who makes it decisions using technical's that can do everything but predict the future, because of the butterfly affect, in reality all they have to do to see into the future is take a short walk on main street. This government inflated market is full of hot air and it wont take much to deflate it. Sellers are eager to take the buyers money who obviously believe they can see what the sellers can not, but when buyers eventually see what the sellers saw then they will hope new buyers will not see what they now see and if they dont then the markets will go higher but if not then it could get very ugly ver quickly

Oct 16 08:27 AM

[AndrewBaker:]

The VIX dropping like it has worries me because so few others seem worried. The dollar will continue to fall, even allowing for the bounce backs along the way, so commodities and foreign investments make more sense than the home markets. I'm even contemplating the British commercial property market: it's been down for two years now and seems to be coming back up, and there's a lot of ex-UK money finding its way there now.

And bonds, government and corporate, may not be exciting, but they're not the worst home for money right now.

Oct 16 09:08 AM

[ebworthen:]

Trillions in deficit spending, low volume 60% market pop using stimulus, FED money, P/E ratios based on free FED money and gushing money supply, Government backed mortgage deals to kick the bad debt down the road, oil up, gold up, dollar down, joe six pack's money in gold and tips or emerging markets (raises hand while opening a PBR).

Hmmm...

Dorothy! Get in the root cellar! There's a twister coming! Dorothy!

Alas...she is chasing Toto...

Oct 16 04:22 PM

[Cherotree:]

I have been getting sell signals on corporate, municipal and government bond prices for a few days now. We may be experiencing a change in trend in interest rates (up) and bond prices (down). If this continues will the money flow into stocks increase as those sellers look to increase their returns while increasing their risk? Time will tell. Peace!


On Oct 16 09:08 AM AndrewBaker wrote:

> The VIX dropping like it has worries me because so few others seem
> worried. The dollar will continue to fall, even allowing for the
> bounce backs along the way, so commodities and foreign investments
> make more sense than the home markets. I'm even contemplating the
> British commercial property market: it's been down for two years
> now and seems to be coming back up, and there's a lot of ex-UK money
> finding its way there now.
>
> And bonds, government and corporate, may not be exciting, but they're
> not the worst home for money right now.

Oct 17 12:08 AM