David Fry's Market Outlook for Thursday

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Includes: DIA, EWG, FDN, HHH, SMH, UDN, XHB, XLF
by: David Fry

D Fry Market Outlook 19 04 2007

The headline will read happily that the Dow Jones Industrial Average has made a new high, wiping-out the sharp decline of late February and early March. That is that!

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Leading markets higher were earnings from important companies, especially financials [banks] that are heavyweights in the DJIA pushing it higher.

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Not to be left out were homebuilders, caught in another short-squeeze. Mortgage foreclosures up 47% from last year, and Freddie Mac (FRE) and Fannie Mae (FNM) decided to pony-up $20 billion to aid subprime borrowers. How will that work? How will that fit in with their delayed financials? None of our business I guess.

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In tech land earnings were mixed, as Yahoo! Inc. (NASDAQ:YHOO) was hit hard while semi's rallied led by Intel Corp. (NASDAQ:INTC). eBay Inc.'s (NASDAQ:EBAY) earnings can change the complexion for the Internet space. Some cash-rich tech companies in the semiconductor space are contemplating increased stock buybacks. So much for research and dividends.

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Less noticed in the DJIA hullabaloo was the declining dollar, which will be pointed to as the villain should markets ever decline again.

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In other markets things were just okay, since the DJIA is headline stealing today.

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Meanwhile around the planet everything seems to be just moving along.

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The folks who bought you United States Oil Fund ETF (NYSEARCA:USO) today launched United States Natural Gas ETF (NYSEARCA:UNG). If you have the stomach for trading a market this, volatile you're welcome to step up to the plate and give it a go. Just remember, PowerShares DB Energy Fund (NYSEARCA:DBE) includes only a 10% allocation to natural gas for one primary reason -- volatility. This is the commodity that caused hedge fund Amaranth to collapse. An active hurricane season could cause prices to spike seasonally. Good luck!

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That's a wrap. The bulls remain squarely in charge. I do detect some hesitancy in some overseas markets, but they've had a good run and might take a rest here. More earnings will drive markets. And once that's over the condition of the dollar may take center stage. But who can predict the future?

Disclaimer: Among other issues, the ETF Digest maintains long or short positions in: streetTRACKS SPDR Homebuilders ETF (NYSEARCA:XHB), First Trust DJ Internet Index ETF (NYSEARCA:FDN), PowerShares DB U.S. Dollar Index Bearish (NYSEARCA:UDN), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), PowerShares DB Base Metals Fund (NYSEARCA:DBB), PowerShares DB Energy Fund (DBE), S&P 500 Index (NYSEARCA:SPY), MidCap SPDRs ETF (NYSEARCA:MDY), iShares Russell 2000 Index ETF (NYSEARCA:IWM), iShares MSCI EAFE Index Fund ETF (NYSEARCA:EFA), iShares MSCI Emerging Markets ETF (NYSEARCA:EEM), iShares MSCI Mexico Index ETF (NYSEARCA:EWW), iShares MSCI Brazil Index ETF (NYSEARCA:EWZ), iShares MSCI Canada Index ETF (NYSEARCA:EWC), iShares MSCI Germany Index Fund (NYSEARCA:EWG), iShares MSCI Netherlands (NYSEARCA:EWN), iShares MSCI Japan Index ETF (NYSEARCA:EWJ), iShares MSCI South Korea Index Fund ETF (NYSEARCA:EWY), iShares Trust FTSE-Xinhua China 25 Index Fund (NYSEARCA:FXI) and iShares MSCI Australia Index Fund (NYSEARCA:EWA).