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<< Return to page 1 - Weak Volume, Weak Dollar, Big Rally

Bernanke, Geithner, their global counterparts and the US government seem hell-bent on reflating all asset classes in an “inflate or die” mode. So we go back to rally mode on a sea of liquidity and the notion interest rates will never rise again. As for jobs, pish-posh, who cares! But, Wall Street pros must believe holiday shopping will be a big-time winner based on the action in XLY and that’s hard to figure with unemployment at 10.2%.

The ongoing mystery is light volume. We sell off on heavy volume and rise on ultra-light volume. This may just mean a market dominated by hedge funds and trading desks with Main Street just spectators. But the action on prices is impressive even if the gang of players is limited.

There’s another issue resurfacing which is fee income structure—the lifeblood of the financial services industry. Combined with short memories, not to mention greed and fear, firms want you to forget 2008 ever happened by resurrecting the “buy and hold” theme so dear to those dependent on a steady stream of evergreen fee income. This notion is being pushed hard—real hard. They may win, but to recapture 40-80% losses they’ll have to do a lot better by twice that level. They’ve a ways to go.

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

Disclaimer: Among other issues the ETF Digest maintains positions in: VTI, XLY, TBT, TIP, GLD, DGP, DBC, USL, EFA, EEM 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

Source: Tuesday Outlook: Commodities, Global Markets