Friday Outlook: Commodities, Global Markets

<< Return to page 1 - Wall Street Roulette

The market has lost its dominant trend the past two months, substituting lots of action but no real progress. That will change eventually but no one likes trading range markets. Just when you think markets are starting in one direction we reverse course. Clearly, after a 50-60% gain from March lows, consolidation is not unexpected. I’d be most careful of January since bulls may prop things up artificially through the holidays.

Most interesting today is what’s going on with UUP. Who is making these big bets? What information do they have we don’t? We’ll find out eventually but if these speculative positions pay off for them, it could upset a lot of positions particularly in commodities and perhaps Emerging Markets as well.

This post is deliberately short due to other commitments. The employment data tomorrow is important and doing a good job of analyzing this currently is Jesse’s Café Americain. I suggest you give it a read.

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

Disclaimer: Among other issues the ETF Digest maintains positions in: VTI, XLE, GLD, DGP, EFA and EEM.

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

[rick12345:]

Suppose one encouraging thing was the missing sell-off late in the day. Unemployment, hopefully at 9.8%. If it jumps to 10% the market will tank big time.

Nov 06 03:12 AM

[User 108849:]

would a big call position mean a hedge against a big short trade!!

Nov 06 05:47 AM

[Daniel Herkes:]

The dollar purchases are interesting. I suppose the bet is on that the commodity prices have reached the asset bubble phase. That make the dollar look pretty good. Jeez, what a choice! The up/down flat-line market thrashes on. The squid feeds on CDS's, and the hapless investor (me) cannot get a trade in edgewise. My money is not at all valuable, and the commodities and equities, are valued in said currency.

Nov 06 06:33 AM

[MikeD71:]

We all know we are well above 10%, and have been some time. But I'd be stunned to actually hear it. Look for, cough, cough...9.9%.


On Nov 06 03:12 AM rick12345 wrote:

> Suppose one encouraging thing was the missing sell-off late in the
> day. Unemployment, hopefully at 9.8%. If it jumps to 10% the market
> will tank big time.

Nov 06 07:49 AM

[predictorma...:]

All data and all major earnings are coming in at or above "expections".

I was as surprised as everyone to see the market move strongly higher this week, but not totally surprised- I got out of all my short positions last week.

Moving cautiously back in. I am basing this move on the fact that this is the third minor (very minor) correction since the rally started, and the previous two times it went higher after. My guess is higher again.

Nov 06 08:09 AM

[Seeking Advice:]

Perhaps the path of least resistance for now is still up. There will be an extension to the first time home buyer credit and the U.S Fed and central banks world-wide seem to be taking action to ensure "easy money" to support as much economic growth as they can and in turn supporting equity prices (and commodity prices). As much as I have my doubts about true economic growth and concerns about moral hazard and increasing deficits, I keep feeling foolish when I start to get the urge to fight "the system".

I also see that it's more likely for right now that we edge a little higher than moving lower. But, of course, remain vigilant and aware of signs of potential big moves either down or up.

Nov 06 08:44 AM

[David Fry:]

Our hosting service is down and therefore so is our website.

Nov 06 09:22 AM

[sacking:]

Above 10% unemployment and it looks like buy on open was a good strategy. Can it hold about 10k? Can oil stay above $80? Inquiring minds want to know! Especially since I'm long EWZ and BRF. Will the passing of the next housing stimulus package help stabilize housing? I'm long VNQ. Thanks for your insights Dave. Have a good weekend.

Nov 06 11:30 AM

[AndrewBaker:]

The rolling over of banks and financials is infuriatingly slow, but rolling over they are: I am waiting for the big drop, but other parties are doing their best to hold these up, and they will probably succeed for a whiles longer. This means, IMHO, that that big drop will be even harsher than it need be; giving the bears a nice return for going short at the appropriate time. And that is the problem: when is that?

Nov 06 03:08 PM

[ebworthen:]

If the FED doesn't raise rates, they must be betting on a big correction (crash) in the markets.

Go look at the dollar index from a level of 72 in June '08 to 87 in December '08 as the markets crashed.

I'd be willing they are buying puts and betting on a major correction because I don't see the FED raising rates until 2011 or later unless the whiplash of inflation comes sooner.

Nov 06 07:26 PM

[NICOLA/NICK:]

Oooops ... we're there!


On Nov 06 03:12 AM rick12345 wrote:

> Suppose one encouraging thing was the missing sell-off late in the
> day. Unemployment, hopefully at 9.8%. If it jumps to 10% the market
> will tank big time.

Nov 06 11:08 PM

[User 466494:]

it looks like a big crash is coming very soon, and therefore the bet on the dollar, which logic dictates will be buoyed by scared panic money, but I am not so sure that this will go as planned for the Goldman Sucks crowd, as people are a little wiser, and may end up buying the only true currency, GOLD

Nov 07 02:25 PM