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Daves Daily 1 11 06

September and October are supposed to be lousy months but not this year. That's why there's a historical average return for these months. October is over and portfolio reports should look good as month-end window dressing ceases. What will November bring besides election results? Equity markets, even with a mini-correction or sideways action the past few sessions, still appear much overbought. Most pundits expect the aftermath of the election to either lead to another up-leg or the opposite. We'd just like to see markets move sideways for awhile in a boring fashion as the best way to relieve these conditions. But, we don't make the rules.

Bonds rallied today as consumer confidence data declined and a weaker than expected Chicago Purchasing Managers report buoyed buyers. Some fear that consumers are feeling that the slowdown in homebuilding is starting to affect employment. According to MarketWatch, Scott Hoyt, and economist for Moody's Economy.com said, "Consumers are stretched."

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The lighter volume in PowerShares indexed ETFs versus conventional index-linked issues is a reflection of low retail participation in a market dominated by institutions.

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Let's wander the globe a little shall we?

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Okay, that does it for October and as occurred for much of 2006, bulls find a way to boost prices toward the end of each month. Now November and elections loom with the results not necessarily meaning much to markets. But then, who knows where news will come to either rally stocks or knock them down.

Have a pleasant evening.

Disclaimer: The ETF Digest maintains positions in: iShares Lehman 7-10 Yr Treasury Bond ETF (NYSEARCA:IEF), iShares Lehman 20+ Year Treasury Bond ETF (NYSEARCA:TLT), PowerShares Dynamic OTC Portfolio ETF (PWO), S&P 500 Index (NYSEARCA:SPY), PowerShares Zacks Micro Cap (NYSEARCA:PZI), PowerShares Zacks Small Cap (PZJ), iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB), iShares MSCI Switzerland Index (NYSEARCA:EWL), iShares MSCI Spain Index ETF (NYSEARCA:EWP), iShares MSCI Malaysia Index (NYSEARCA:EWM), India Fund Inc. (NYSE:IFN), iShares MSCI Australia Index (NYSEARCA:EWA), iShares FTSE/Xinhua China 25 Index (NYSEARCA:FXI), iShares MSCI Mexico Index ETF (NYSEARCA:EWW) and iShares MSCI Brazil Index ETF (NYSEARCA:EWZ).

Source: David Fry's Daily Market Outlook