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D Fry Market Outlook 22 02 2007

I did point-out a "gold smackdown" just yesterday didn't I? Fed Governor Susan Bies also said just yesterday that everything with interest rates, inflation, housing and the economy was just dandy didn't she?

This is another example of why predicting the news cycle and markets is a silly and unreliable effort. It just shows why putting your ego aside letting the markets tell you what to do is, for me anyway, the only way to go.

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Now we could just leave the charts above and make no further comment since these for us are at the heart of the matter today.

But wait......there's more.

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Overseas conditions are more inconsistent than previously. Much of this has to do with Iran, holiday thin trading in Asia and Latin America, and commodity market volatility.

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Today investors were of two minds: buy some stocks and some protection. So gold reversed course and with it crude oil. And, sure, if there's some kind of geopolitical event with Iran and the U.S. over nukes or Iranian killing of American boys in Iraq then the two will be "linked" period.

We continue to adhere primarily to weekly analysis, which means you have to sit tight through some volatile conditions. If nothing else, this short week is carrying a lot of entertainment value if you're on the right side of things.

The other important part of being disciplined is not getting too smug about your positions since Mr. Market can make you look stupid fast. Nothing could be truer than dealing with commodities whether of the ETF variety or being leveraged in the futures market. Silver still gives me the "willies" since one way or another I've traded it before the Bunker Hunt debacle. I often tell the story of being at a conference in the mid-80s and bragging about my silver position going into a meeting. When entering the meeting, silver was hitting $12.00 and my cost was $9.00. When the meeting was over two hours later silver was $8.50 and I sulked off to my room for a stiff drink.

"DOH" is right!

Have a pleasant evening.

Disclaimer: Among other issues, the ETF Digest maintains positions in: streetTRACKS Gold Trust ETF (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), Market Vectors Gold Miners ETF (NYSEARCA:GDX), PowerShares DB Precious Metals Fund (NYSEARCA:DBP), NASDAQ 100 Trust Shares ETF (QQQQ), S&P 500 Index (NYSEARCA:SPY), Rydex S&P 500 Equal Weight (NYSEARCA:RSP), iShares Russell 2000 Index ETF (NYSEARCA:IWM), Ultra Russell 2000 ProShares (NYSEARCA:UWM), MidCap SPDRs ETF (NYSEARCA:MDY), ProShares Ultra MidCap400 (NYSEARCA:MVV), First Trust DJ Internet Index ETF (NYSEARCA:FDN), iShares Goldman Sachs Network Index Fund (NYSEARCA:IGN), PowerShares Zacks Microcap Index (NYSEARCA:PZI), iShares MSCI EAFE Index Fund ETF (NYSEARCA:EFA), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), iPath MSCI India ETN (NYSEARCA:INP), iShares MSCI Canada Index ETF (NYSEARCA:EWC), iShares MSCI Australia Index Fund (NYSEARCA:EWA), iShares S&P Latin America 40 Index Fund (NYSEARCA:ILF), iShares Trust FTSE-Xinhua China 25 Index Fund (NYSEARCA:FXI), iShares MSCI Japan Index ETF (NYSEARCA:EWJ) and iShares MSCI Malaysia (NYSEARCA:EWM).

Source: David Fry's Daily Market Outlook