David Fry's Daily Market Outlook

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Includes: EEM, EWM, FXI, GDX, GLD, IEF, INP, IWM, QQQ, SPY, XLF
by: David Fry

D Fry Market Outlook 28 02 2007

Complacency is the prime killer for most investors. The longer things continue to go your way, conventional risks become ignored until "bam" you're taken by surprise.

I can't count the number of times we've posted various emerging market charts with warnings about the potential for rapid and serious corrections such as witnessed last summer. If you're looking for some intelligent guidance there isn't any available from any source on the Street today.

Today was a train wreck.

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The aforementioned is pretty much the picture everywhere. On a day of heavy selling like today, the selling becomes indiscriminate and things that shouldn't go down much get tossed carelessly. Precious metals are a case in point. The dollar was weak, crude oil was a little higher, but gold and silver get tossed. Why? Because when selling begins investors look around and sell positions where they have profits to offset perceived or real losses elsewhere. It's a "get me out" mentality.

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You have to wonder about the clumsy and immature way Chinese authorities have handled their market comments and policy decisions. First, just a few short weeks ago, they indicated a desire to slow things down and stopped the issuance of new shares. That must have offended someone high up, since they changed their minds in one week. Now they put a hammer on markets driving them down 10% by restricting lending for stock purchases. They don't have the finesse yet, and may just squander any credibility for awhile.

There's not much we can say to make markets appear better than they are. Perhaps the Fed will start launching the helicopters to print more money to reinvigorate things. This may be a one day wonder, but expect more follow-thru selling tomorrow morning at least. Then we'll have to see if markets can just move sideways for awhile. That would be the best thing that could happen.

Normally I'd sign off with, "have a pleasant evening," but that seems out of place today.

Disclaimer: Among other issues, the ETF Digest maintains positions in: iShares S&P Latin America 40 Index Fund (NYSEARCA:ILF), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), NASDAQ 100 Trust Shares ETF (QQQQ), S&P 500 Index (NYSEARCA:SPY), MidCap SPDRs ETF (NYSEARCA:MDY), iShares Russell 2000 Index ETF (NYSEARCA:IWM), iShares MSCI Malaysia (NYSEARCA:EWM), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), iShares Silver Trust (NYSEARCA:SLV), PowerShares DB Precious Metals Fund (NYSEARCA:DBP), PowerShares DB Energy Fund (NYSEARCA:DBE) and Market Vectors Gold Miners ETF (NYSEARCA:GDX).