Thursday Outlook: Commodities, Global Markets 29 comments
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<< Return to page 1 - A Long-Awaited Sell-Off
Now we await dip buyers and wonder how low the McClellan Oscillator can go before we reverse sharply. End of month tape painters are missing so far. This just won’t do! Bullish portfolio managers, and certainly the always bullish financial media, must find a negative month unacceptable.
Evidently a dollar rally is not a welcome event for bulls. The bottom line is Bucky hasn’t rallied that much yet. It’s just an oversold rally as best we can tell. But, we’ll see how it goes.
There’s not much excitement in after hours trading unless you’re a bear on First Solar (FSLR).
Tomorrow GDP and Jobless Claims are upon us. And, guess what? Turbo Tim will be speaking and trying to spin things as best he can.
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, VTI, RSP, TZA, XLY, FAZ, SRS, UDN, GLD, DBC, USL, XLE, EFA, EEM, IEV, EWC and FXI.
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 29 comments:
Yesterday, your article that was posted before the market opened indicated that you expected a rally. After yesterday's sell-off, your article today indicates that you expected the sell-off. Are the two articles contradictory?
You are the most followed contributor here on SA and you deserve credit for that. If you wouldn't mind, I kindly ask that you explain what insight you hope investors are going to gain from all the charts and commentary. Do you hope to educate them on your expectations for the market's move the next day, the next week, the next month, ...?
Personally I think investors would hope that at the end of your posts you would offer an opinion of the market's future direction. That's easier said than done of course.
Given that most of the stimulus money (and the massive deficit budget) remain unspent, could this possibly be a time for recalibrating "The Plan"?
I hope so, but I'm not holding my breath. More likely, more of the same.
On Oct 29 06:44 AM Daniel Herkes wrote:
> I expected a small rally myself, until the housing numbers came!
> I'd have to read all of these charts differently to draw another
> conclusion. If Mr. Fry just puts the information out there, I'm willing
> to make my own mistakes. I make plenty of mistakes. . . As per another
> article this morning, employment is defiantly a leading indicator
> - now.
jim
> Interesting. I would have thought a stronger USD would be good for
> those countries such as Canada, Brazil and Australia who earn income
> by exporting commodities, especially with prices as low as they are.
> Just goes to show how little the US understands about foreign markets.<
Affirmative, a strong US dollar is brilliant for Canada's exports. It doesn't affect Australia because most of their trade is with China.
> Interesting. I would have thought a stronger USD would be good for
> those countries such as Canada, Brazil and Australia who earn income
> by exporting commodities, especially with prices as low as they are.
exactly.
And good news for companies who sell contract price commodities in US dollars but whose costs are in local currency. Their margins grow as the dollar strengthens. BHP, Vale and Rio in the iron ore market are some obvious examples.
So what is the point? What is the plan? What is threatened? How to react? What is the opportunity?
These matters should be discussed so that those who want to can benefit from the knoweldge and experience of SA
"Diligent weeding is better then praying"
A crumby 3 billion dollar program (cash for clunkers) adds 1.66 points to GDP? Meaning without it GDP would have been 3.5-1.66 = 1.84%? How is it possible that a mere 3 billion dollar incentive program could leverage into that kind of data?
Anyway, like Dave said, we
I think fjpenney wants you to tell him what to do. And you did... he just wasn't listening. The message I gleaned from yesterday's post was - O.K. we're finally seeing some rational correction in prices, but, beware of da boys, 'cause they can ramp it up any time they please.
Here's another take on the question of volume - wonder if anyone buys into this. The low volume is a contrarian indicator. Low volume suggests investors, writ large, are highly skeptical of the rally, and that investor sentiment has been and remains in the toilet. If that is correct, and if we have been in a bull market of late, it would be unusual for the bull market to end in widespread gloom and skepticism. Bull markets typically end when 9 out of 10 people you meet on the subway are investing their life savings into risky assets with conviction. Well, looking at this light volume over the last half year, I wonder whether only 5 out of 10 people on the subway are investing in risk with determination and certainty. And I wonder how many of these five guys are like me, terrified each day the market is open for business, finger poised above the sell button, secretly bearish.....
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 etfdigest.com.
There is no intention to make predictions since as ETF Digest Sacred Cow IX (a quote from economist Edgar Fielder) "If you must forcast, forecast often".
Getting the rally we're having today is hardly a surprise given how oversold things had become on the McClellan Oscillator. It's pretty accurate (meaning not perfect) in making these calls from the levels of yesterday.
Much thanks as always. Hope you're enjoying New England.
Sometimes we become so ingrained in ideologies that we forget these people have concerns, emotions and fears like the rest of us. It just so happens that his decisions can have a great impact not only on the lives of those serving in our military but on the country as a whole. I wouldn't want his job and I doubt many average joes would have a clue if in his position. I continue to support my president and pray that his decisions will strengthen our country and hopefully bring us closer together!
Peace!
On Oct 29 08:57 AM robert.b.ferguson wrote:
> Thank you David reading your comments on the charts has changed the
> day's out look. You see I came in this morning with an attitude.
> I was angry because the first item on the morning news was our illustrious
> President on hand for a group of fallen heroes arriving home from
> the Afghan area of operations (seekingalpha.com/symbo...).
> Normally the commander and chief doing this wouldn't cause this reaction
> because I expect the POTUS to do this. However this is the first
> time he has done so and I find the timing of his sudden concern for
> those who gave all suspicious. Being a retired soldier and veteran
> of two combat campaigns I resent this man using this occasion as
> a photo op. He has been holding high level consultations on the Afghan
> AO with every one but the military leadership for the last five weeks.
> He finally brought the joint chiefs to the party last Friday regarding
> their request for Afghan reinforcements. His vast experience with
> counter insurgency operations should stand him in good stead to speak
> with them regarding tactical operations and troop movements. God
> help us B.H.O seems determined to be the next L.B.J and the results
> could very well be much worse. Sorry about the rant folks I guess
> I wasn't as cheered as I first thought. You too are an old war horse,
> Double Guns what do you think? Am I way off base here?
On Oct 29 09:52 AM Alex Trias wrote:
> David introduces an important concept, something that might be worth
> fleshing out a bit. We're due for a short term rally - probably today
> or Friday, under various technical indicators - NYMO, for instance.
> Longer term, if I read David correctly, we're poised for a more severe
> downturn in the price for risky assets. One of the main items (certainly
> not the only item) that David points to is this pattern of low volume
> up days, high volume down days that we've seen these last few months.
> And overall, volume has been fairly pathetic over the last bunch
> of months in any event, which signals a lack of conviction on the
> part of bulls.
>
> Here's another take on the question of volume - wonder if anyone
> buys into this. The low volume is a contrarian indicator. Low volume
> suggests investors, writ large, are highly skeptical of the rally,
> and that investor sentiment has been and remains in the toilet. If
> that is correct, and if we have been in a bull market of late, it
> would be unusual for the bull market to end in widespread gloom and
> skepticism. Bull markets typically end when 9 out of 10 people you
> meet on the subway are investing their life savings into risky assets
> with conviction. Well, looking at this light volume over the last
> half year, I wonder whether only 5 out of 10 people on the subway
> are investing in risk with determination and certainty. And I wonder
> how many of these five guys are like me, terrified each day the market
> is open for business, finger poised above the sell button, secretly
> bearish.....
Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, VTI, RSP, TZA, XLY, FAZ, SRS, UDN, GLD, DBC, USL, XLE, EFA, EEM, IEV, EWC and FXI
On Oct 29 05:56 AM fjpenney wrote:
> David:
>
> Yesterday, your article that was posted before the market opened
> indicated that you expected a rally. After yesterday's sell-off,
> your article today indicates that you expected the sell-off. Are
> the two articles contradictory?
>
> You are the most followed contributor here on SA and you deserve
> credit for that. If you wouldn't mind, I kindly ask that you explain
> what insight you hope investors are going to gain from all the charts
> and commentary. Do you hope to educate them on your expectations
> for the market's move the next day, the next week, the next month,
> ...?
>
> Personally I think investors would hope that at the end of your posts
> you would offer an opinion of the market's future direction. That's
> easier said than done of course.
I notice you reference a 22 period MA often. As an aforementioned newbie, I am not aware of why you use 22, or for that matter - what a "period" is. Could you elaborate? Also, your disclaimer indicates you have positions in the various ETFs noted, but doesn't indicate whether you're long or short. Are you willing to share that information as well?
Thanks again, David, and best wishes to you and yours!
On Oct 29 10:55 AM Cherotree wrote:
> Or just maybe President Obama was deeply touched by the deaths of
> courageous soldiers who gave their lives in defense of our country
> primarily as a result of his step up in military activity in Afghanistan.
> Silly me, that could not be it. After all, he isn't human and therefore
> has no emotions!
>
> Sometimes we become so ingrained in ideologies that we forget these
> people have concerns, emotions and fears like the rest of us. It
> just so happens that his decisions can have a great impact not only
> on the lives of those serving in our military but on the country
> as a whole. I wouldn't want his job and I doubt many average joes
> would have a clue if in his position. I continue to support my president
> and pray that his decisions will strengthen our country and hopefully
> bring us closer together!
>
> Peace!
But then US$ is more affected by Euro$.
Look at Euro$ weekly chart:
There is a missing v-th wave of the 5th wave of the C wave up. Euro$ will require 2 to 4 weeks of consolidation range before it ramps up again toward 1.522 weekly fibo confluence area or even goes extended run toward the 1.598 double top since the pattern from the last low for this run up for Euro$ can support a run toward double top.
That will provide relief to the US equities specially now that the GDP had been released with better than expected results and GS was able to lower investor expectations with their own report before the government's release.
Once Euro$ and US$ goes into consolidation range on the daily chart for several weeks, that will provide enough confusion on most traders and investors reliant on US equities vs. US$ inverse relationship while the GDP and potentially next week's unemployment report carry the days and weeks ahead.
Peace!
On Oct 29 06:44 PM robert.b.ferguson wrote:
> Where has he been for the last nine months? Do you think that this
> is the first time since he was inaugurated that fallen soldiers have
> come home? Was he present with out the media? If so why was it a
> big show this time? Do you understand how those of us who have lost
> brothers in arms feel about politicising these events? Have you ever
> sent your comrades off to combat operations or been there your self?
> If not then don't try lecturing me or questioning me on what protocol
> requires and why this pissed me off so much.
They are being hindered by their very obvious resistances on their weekly charts.
Transports is being prevented from executing the 5-th wave rally by the weekly resistance of 4033 but has served enough time consolidation to support a rally toward the 4479 area before it will require multi-month correction.
Semi-conductors is being prevented from going further up by the obvious resistance of 338.10. $SOX next run target will be in the 350 area but can potentially run much higher for 400 to 423 extended range if has already formed a running correction.
Financials is figthing hard against the 46.52 resistance and is able to use that resistance as a pivot instead. $BKX can go 5 to 10 weeks meltup after the last 10 weeks run up and has more than enough consolidation time to support the next price rally.
In all cases; the three sectors are not bucking down against their strong weekly resistances and are challenging those resistances again and again. Like hammer blows; a few more blows and those resistances will crack and $TRAN, $BKX, and $SOX will be on their way toward the next rally on their weekly charts.
Therefore, $INDU, $SPX, and $COMPQ will be going into another several weeks of rally once their primary sectors crack thru their weekly resistances.
What's more; with developing countries' stock markets needing much needed rest and will have to consolidate for several weeks; international investors will start looking at the US equities once the US trio goes into several weeks of rally while Emerging Markets, Brazil, Russia, India, and potentially China stayed in their required corrective ranges for several weeks.
Mr. Fry's comments are sometimes enlightening . . . always entertaining.
Thursday's sell-off looks nothing like Friday's sell-off.
I hope this time Tim, Ben and GS keep their damn noses out of it for a change!!