David Fry's Daily Market Outlook

We thought Goldman Sachs (GS) earnings would be the major focus today, and they were briefly, but mortgage market problems took center stage, and problems there blew-up the stock market today.

Further, delinquent payments on mortgages reached their highest level (4.95%) in three and half years while foreclosures continued to increase. Federal Housing Authority loan delinquencies reached 13.46% and subprime reached 13.33%.

Since the rout two weeks ago there hasn't been a rational way to position yourself in this market, unless you were a day trader or been willing to assume great risks. Since we're not interested in either, standing aside has been the best strategy at least for the time being.

By market sector, you really need to stay focused on the consumer ["Chucky"] and financials.

I wonder why current data has yet to be posted? Could it be they can't figure out what happened two weeks ago? Or find it embarrassing?

In the meantime, the Fed has been busy conducting repurchase agreements as $12 billion expired, while $8.25 billion was added, for a net total of $32.25 billion outstanding. But it seems not to be having the usual affect yet.

As stated previously, the market is almost too hot to handle. One day you can look like a genius, and the next a dope. In these types of conditions it may be best to just stand aside and let others beat themselves up. It can be a frustrating spectator sport but then sometimes it's the best thing to do.

We'll start hearing plenty of soothing talk from officialdom and Wall Street hierarchy probably as early as tonight and tomorrow. They'll be minimizing mortgage difficulties and suggesting you remain in the game [paying them fees] and focused on the long-term.

Have a pleasant evening.

Disclaimer: Among other issues, the ETF Digest maintains positions in: MidCap SPDRs ETF (MDY), streetTRACKS Gold Trust ETF (GLD) and iShares Lehman 7-10 Yr Treasury Bond ETF (IEF).