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D Fry Market Outlook 12 04 2007

Inflation? Stagflation? Interest rates up or down? Economy growing or slowing? When investors are confused, you can count on the market reversing -- in this case it declined. Investors seemed undone by the release of previous Fed meeting minutes. Why should they be is what I wonder. What were they expecting? The minutes basically reflected what we all knew and what the Fed's been saying all along, "we're on hold."

The markets we're focused on the most didn't do that much today.

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A few other markets where we're focused in the U.S. are real estate and financials.

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Earnings should shift investors' attention away from the Fed minutes which will age quickly. Genentech Inc. (DNA) reported good earnings that were inline with estimates while Research In Motion Ltd. (RIMM) also reported basically inline earnings.

We're still more interested in what's going on overseas since the action there has been impressive to say the least. Some would argue that things have gone too far. Making that point is the following chart comparing the NASDAQ bubble to the Shenzhen Composite.

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One thing you can do fairly easily is find chart patterns you can overlay one to another. The problem can be with percentage differences. Nevertheless Michael Panzer makes his point -- is it different this time? Bear's eat this up.

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Sure, many want more U.S. stock market analysis, but we should really just focus on the sectors that can be "change agents." Besides, I'm tired.

As far as overseas markets are concerned, we'll just let the charts speak comparatively for themselves.

There was a lot of amazing stuff to read about today:

  • The Fed minutes with the sissy and needlessly confused reactions.
  • Wachovia's statement that many mortgage lenders were "surprised" by the subprime problems was dumbfounding.
  • The National Assn. of Realtors predicting that home prices could fall in 2007 for the first time in 38 years must have gone to hand-count vote of members.
  • And lastly the NASD issued a warning to investors about the dangers of margin buying [registration required]. What's so strange about that? The SEC just dramatically lowered margin requirements for portfolio investments -- in some cases by over 70%! Weird. Well, it's CYOA time for them.

Disclaimer: Among other issues, the ETF Digest maintains long or short positions in: PowerShares DB US Dollar Index Bearish (NYSEARCA:UDN), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), PowerShares DB Precious Metals Fund (NYSEARCA:DBP), PowerShares DB Energy Fund (NYSEARCA:DBE), PowerShares DB Commodity Index Tracking Fund (NYSEARCA:DBC), streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), streetTRACKS KBW Bank (NYSEARCA:KBE), iShares Trust FTSE-Xinhua China 25 Index Fund (NYSEARCA:FXI), iShares S&P Latin America 40 Index Fund (NYSEARCA:ILF), iShares MSCI Germany Index Fund (NYSEARCA:EWG), iShares MSCI Canada Index ETF (NYSEARCA:EWC), First Israel Fund Inc. (NYSEMKT:ISL), TA100 INDEX, and iShares MSCI Australia Index Fund (NYSEARCA:EWA).

Source: David Fry's Market Outlook for Thursday