Friday Roundup: Commodities, Global Markets

<< Return to page 1 - High Volatility = Greed & Fear

No question about it, this was a weird week fraught with volatility not even captured in a still relatively tame VIX. But, it’s October and “trick or treat” time is just around the corner.

We’re through the bulk of earnings by now and for the most part many are selling the news believing it can’t get any better. My own sense is lots of money managers have a vested interest in protecting a positive year as we head toward the finish of (can you believe it!) 2009. That said, we can still have a crappy November with the major “stick save” still available in December. That’s about as far down the line of forecasting the Fryguy can venture.

Next week we’ll get the usual assortment of economic data (Home Prices, Consumer Confidence, Durable Goods, Jobless Claims, GDP and concluding with Personal Income, Chicago PMI and more Consumer Confidence data) and what’s left of earnings. It’s also the last week of the month and tape painters will be about making sure to prop prices to put a positive end to the month.

I hope you all have an enjoyable weekend!

Let’s see what happens and you can follow our pithy comments on twitter.

Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, RSP, VTI, MDY, IWM, XLY, DVY, UDN, GLD, XLE, USL, BDD, EFA, EEM, 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

[TradingHelp...:]

Brilliantly comprehensive. If you were a chef I wouldn't need to eat again for a week.

Oct 25 04:02 AM

[Bull Run:]

To begin next week, I starting to have reservations. I think the week could be a disaster for N. American markets. With week transports coming in, and the market looking overbought, it will not take much of a sell-off to accelerate the sell-off, as many that are in the market, cannot afford loses in this economy.

Oct 25 01:29 PM

[tunaman4u2:]

I read this article every day....
I just can't get over how quickly oversold occurs on the same point move as overbought...

Now just under 10K is deeply oversold? The markets at its high last week was neutral...

Oct 25 09:11 PM

[Robert Mart...:]

Dave,
Good observation: Small-cap stocks ARE the "canary in the coal mine." Small-caps are hard to manipulate, economically sensitive, and have less access to capital in this lending environment.

It is a good signal for the long-awaited break in the market that has yet to arrive.
Rob

Oct 25 11:41 PM

[Options Tra...:]

Well, I really don't think any traders will expect the 10,000 points to be a smooth sail. It is a strong psychological resistance level that is bound to encourage profit taking, which was what we have witnessed in the market this past week as the daily candlesticks line up skewered on the 10,000points line.

Oct 25 11:44 PM

[Joe Shareho...:]

Let's face it, we all know fundamentals haven't changed. People are still losing their jobs (and don't say it's a lagging indicator, it was only a lagging indicator in the 80's when the Fed was trying to wring out inflation and interest rates soared). Also, Congress and this administration are too concerned about Fox News, Glenn Beck, and Rush to notice our enemies are feeling more empowered than ever right now and are VERY dangerous. See Iran, Russia, N Korea, and soon to be China because we've ruined our dollar at their treasury invested expense.

You add international turmoil to a compromised economy with an incredible debt burden and it ain't pretty. I'm not a doom and gloomer, just a realist.

Oct 26 12:43 AM

[Mad Hedge F...:]

mmns When everything is working, and my portfolio is firing on all 12 cylinders, I pinch myself and ask “Is this real? What can go wrong?” I’m reminded of the slave whose task it was to remind conquering Roman generals “All glory is fleeting.” Virtually all of my recommended core longs in gold, silver, Canadian, New Zealand, and Australian dollars, Brazil, Russia, India, South Korea, Taiwan, Vietnam, and junk bonds are at or near highs for the year. I called the bottom in Natural Gas within 40 cents, and mercifully baled on my one short in US government bonds, the TBT. What we are seeing is a global surge in liquidity as cash emerges from the bomb shelter, squints at the day light, and then rushes to buy the first thing it can find. Everything is going up, regardless of fundamentals. It is the proverbial tide that is lifting all boats. You can make a lot of money in these conditions, but there is no way of knowing if this will last for one week, or another year. But they can go on much longer than you think. In the last two liquidity driven markets I traded, Japan in the eighties and NASDAQ in the nineties, fundamental analysts railed against the tide for years, claiming that stocks were overvalued, each call getting their office moved ever closer to the elevator and men’s bathroom. When someone finally did throw the switch on these markets, it got dark amazingly fast. Tokyo went out at an all time high on the last day of 1989, and then dropped a staggering 45% in January. NASDAQ plunged just as fast from its 2000 top. The one thing we can all be certain about is that the survivors have vastly improved their risk control after our recent crash. Make hay while the sun shines, but keep your finger hovering over that mouse. The level of risk is definitely high than it was in March. When the next real downturn starts, it could resemble a flash fire in a movie theater.

Oct 26 06:23 PM