David Fry's Daily Market Outlook for Tuesday

|
Includes: EEM, EWA, EWN, EWO, FXA, GLD, SPY
by: David Fry

D Fry Market Outlook 27 03 2007

I was worried about the escalating Iranian situation over the weekend, and it seems Mr. Market was too--well, sort of. More damaging in the early going was crummier home sales data that missed forecasts by a wide margin.

Blame the cold weather? Well I don't wanna say, but geez, most industry CEOs haven't given investors a shred of hope for positive developments for their industry or company. Only Wall Street analysts have been promoting the sector as a "value" play, based on some who feel the stocks are now selling at book value. But based on what data? Old numbers generating "garbage in, garbage out" conclusions? If so, it's a silly and misleading exercise. Funny thing though, none of the pushers on Wall Street believe anything these CEOs are saying or doing. As to the latter, they're still selling their stock.

Anyway, the one-two punch sent stocks reeling early, gold and crude oil rallied while the dollar fell and bonds rallied. By mid-day you would have thought the strong rally begun last week was as quickly over. But no...

D Fry Market Outlook 27 03 2007_001

D Fry Market Outlook 27 03 2007_002

D Fry Market Outlook 27 03 2007_003

D Fry Market Outlook 27 03 2007_004

D Fry Market Outlook 27 03 2007_005

D Fry Market Outlook 27 03 2007_006

D Fry Market Outlook 27 03 2007_007

Let's look at new home sales. Jesse at Cross Roads Café has posted this chart which basically represents the trend.

D Fry Market Outlook 27 03 2007_008

D Fry Market Outlook 27 03 2007_009

D Fry Market Outlook 27 03 2007_010

D Fry Market Outlook 27 03 2007_011

D Fry Market Outlook 27 03 2007_012

D Fry Market Outlook 27 03 2007_013

Obviously, the Iranian situation was on investors' minds today. However, the issue was given an interesting twist with an article by Walid Phares pointing out that domestic pressures from within Iran may be fueling their current strategy.

Where's the money coming from to fuel a stock rally? It doesn't look like the flow of funds is rally-supportive based on the latest report from AMG Data Services. But, this is mostly retail investors and, as Cramer says, "the moron longs." What a guy!

D Fry Market Outlook 27 03 2007_014

So, where else would these funds come from Church Lady? Let's see...um, could it be our tax dollars at work??? Today alone another $9.5 billion from the Fed and another $3.5 billion from the Treasury were tossed to our friends at brokers the primary dealers.

D Fry Market Outlook 27 03 2007_015

D Fry Market Outlook 27 03 2007_016

A variety of overseas markets are featured below.

D Fry Market Outlook 27 03 2007_017

D Fry Market Outlook 27 03 2007_018

D Fry Market Outlook 27 03 2007_019

D Fry Market Outlook 27 03 2007_020

D Fry Market Outlook 27 03 2007_021

D Fry Market Outlook 27 03 2007_022

D Fry Market Outlook 27 03 2007_023

D Fry Market Outlook 27 03 2007_024

D Fry Market Outlook 27 03 2007_025

D Fry Market Outlook 27 03 2007_026

D Fry Market Outlook 27 03 2007_027

I don't really have a lot to add to the action this day. One thing's for sure: it's the end of the quarter and come hell or high water portfolio managers will dress these markets as best they can. They might also get a little help from their friends too.

Tomorrow could be "Turnaround Tuesday" or not. I suspect Bernanke is in some "focus group" rehearsing his sound bites for testimony on Wednesday. This is probably what investors are awaiting. But as always, the news cycle is a pesky and unpredictable thing.

Have a pleasant evening.

Disclaimer: Among other issues the ETF Digest maintains positions in: MidCap SPDRs ETF (NYSEARCA:MDY), PowerShares DB Energy Fund (NYSEARCA:DBE), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), PowerShares DB Precious Metals Fund (NYSEARCA:DBP), iShares Lehman 7-10 Yr Treasury Bond ETF (NYSEARCA:IEF), PowerShares DB US Dollar Index Bearish (NYSEARCA:UDN), Euro Currency Trust ETF (NYSEARCA:FXE), CurrencyShares Australian Dollar ETF (NYSEARCA:FXA), iShares MSCI EAFE Index Fund ETF (NYSEARCA:EFA), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), iShares S&P Latin America 40 Index Fund (NYSEARCA:ILF), iShares S&P Europe 350 (NYSEARCA:IEV), iShares MSCI Netherlands (NYSEARCA:EWN), iShares MSCI Austria Index Fund (NYSEARCA:EWO), iShares MSCI Japan Index ETF (NYSEARCA:EWJ), iShares MSCI South Korea Index Fund ETF (NYSEARCA:EWY) and iShares MSCI Australia Index Fund (NYSEARCA:EWA).