David Fry's Daily Market Outlook

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 |  Includes: EEM, FDN, FXI, IEV, KCE
by: David Fry

D Fry Market Outlook 17 01 2007_001

You wouldn't want to be manning the phones at Claymore Securities today since their new Macro Oil ETFs are wildly out of phase with their intended function. Claymore Macroshares Oil Down (DCR) hasn't given investors the benefit of the risk assumed and the reward realized. Investors in DCR per Claymore's press release: "...give investors an excellent opportunity to capitalize on oil's upward or downward movement." That's the intention anyway. Today crude oil prices were down nearly 3%, but DCR was up 2%. Say again? That's right. And to make matters even more bizarre Claymore Macroshares Oil Up (UCR) was also down over 2%.

What's the problem?

According to executives at Claymore when queried about the tracking errors on Friday they were pretty ticked off themselves pointing the finger at specialist firm Bear Wagner [think Bear Stearns] for poor market making. [It wouldn't be the first time specialists have been accused of ripping off their customers.] And, no, I don't want to hear about crude oil contracts being in "contango" or some such other nonsense. Claymore realizes it's more than just a problem and an embarrassment, it's downright misleading. They're tying to add more AP's [Authorized Participants] for the stock. But, I guess they weren't there today that's for sure. Therefore with some new ETFs it's better to stand back and watch their performance for awhile.

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The big news story today beyond the continuing fall in commodity prices was the poor manufacturing data from the New York region. Also Symantec Corp. (NASDAQ:SYMC) [down 12%] and Cisco Systems Inc. (NASDAQ:CSCO) [down 3%] downgrades didn't help tech. Frankly, it's amazing that tech did as well as it did. Unfortunately, after the bell Intel Corp. (NASDAQ:INTC) earnings were a penny shy although their revenues were on the high side and company outlook was positive. Nevertheless, in the after hours, the stock is down 2.5%.

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From all news and statistical data fresh money is enamored by overseas markets. That still seems the case.

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Judging by the reaction to Intel's earnings this evening, tech could have some problems tomorrow. But things can change quickly.

There's a lot going to happen this week from inflation data to options expiration. Stay flexible and be patient above all.

Have a pleasant evening.

Disclaimer: Among other issues the ETF Digest maintains positions in: NASDAQ 100 Trust Shares ETF (QQQQ), streetTRACKS KBW Capital markets (NYSEARCA:KCE), First Trust DJ Internet Index ETF (NYSEARCA:FDN), iShares Goldman Sachs Network Index Fund (NYSEARCA:IGN), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), iShares S&P Europe 350 (NYSEARCA:IEV), iShares Trust FTSE-Xinhua China 25 Index Fund (NYSEARCA:FXI), INP, iShares MSCI Japan Index ETF (NYSEARCA:EWJ), iShares MSCI Malaysia (NYSEARCA:EWM) and iShares MSCI Mexico Index ETF (NYSEARCA:EWW).