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DFry Market Outlook 15-11-2006
THINGS COULD BE WORSE!

Well, maybe not. D.R. Horton (NYSE:DHI) reports profits down 51%, but that beat estimates and boosted the stock nearly 10% squeezing shorts. But, if you read more about these earnings there still seems trouble ahead with inventory backlog and margin pressure. Like our escapee friend above, it's one thing to dig your way out of trouble; it's another to find the right reward. [Today, the end of the above great escape belonged to short sellers.]

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

Here's the deal folks: if you're on the "short stack," the guy with the "big stack" more often than not is going to win. Most of us little guys are on the "short stack" playing against hedge funds and trading desks that are firmly in control of this market. Please examine the 5 minute chart below and you'll see what's going on clearly.

Today the day begins with some impressive selling volume which dries up around 11 AM. Then all is quiet. "Da Boyz" with the "big stack" toss some chips in [buy orders] and start probing for any resistance. Finding none, they toss in some larger bets just before 1 PM. After meeting little selling, they make larger bets and then wait to see if any "short stack" sellers try to fade their play. Again there is none and they go "all in" around 2:45 PM causing a full blown short squeeze into the close.

DFry Market Outlook 15-11-2006

Producer Prices [PPI] were lower than expected meaning no measurable inflation at least by this method. Bond prices rallied on the news and retail stocks were well bid despite lower retail sales data due to lower gasoline prices. [Think convenience stores.] Also, The Home Depot Inc. (NYSE:HD) reported disappointing sales due to the housing slowdown. But the stock closed up over 4% on the day. It must be because they announced later that they were going to start selling flat screen TVs. Who knew!?!

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

DFry Market Outlook 15-11-2006

The above covers just about every corner of the planet and you can readily see markets moving higher -- even those that may not seem to deserve so. But those are the realities of the trends. If you're on the "short stack", you'd be foolish to mess with "big stack" players DBA "Da Boyz." We just go with the flow.

Disclaimer: The ETF Digest maintains positions in: NASDAQ 100 Trust Shares ETF (QQQQ), S&P 500 Index (NYSEARCA:SPY), iShares Lehman 7-10 Yr Treasury Bond ETF (NYSEARCA:IEF), iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB), First Trust DJ Internet Index ETF (NYSEARCA:FDN), Internet HOLDRS (NYSE:HHH), PowerShares Zacks Small Cap (PZJ), PowerShares Zacks Micro Cap (NYSEARCA:PZI), iShares MSCI Spain Index ETF (NYSEARCA:EWP), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), iShares MSCI Australia Index (NYSEARCA:EWA), iShares FTSE/Xinhua China 25 Index (NYSEARCA:FXI), iShares MSCI Malaysia Index (NYSEARCA:EWM), India Fund Inc. (NYSE:IFN) and Templeton Russia & Eastern Europe Fund CEF (NYSE:TRF).

Source: David Fry's Daily Market Outlook