David Fry's Market Outlook for Tuesday

by: David Fry

Nigerian strike threats and low capacity numbers from U.S. refiners combined to drive energy prices higher. Let's not forget the ongoing tensions in the Middle East. And even without a hurricane spotted yet, you should expect price volatility to continue throughout the summer and well into the fall. There's a lot going on to affect energy prices.

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A Morningstar spokesperson commenting on Rydex currency ETFs in Investment News stated that currency ETFs were "too volatile for the average investor." This is one of the dumbest comments I've read in a long while, and just shows Morningstar's bias against ETFs. Previous to these ETF issues, trading currencies was a risky business given the leverage typically involved. If anything, the new ETFs move very well with overall currency trends, which have been steady rather than volatile.

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Meanwhile the attention focused on bond markets continued as yields fell slightly with high oil prices and poor housing sentiment helping bond prices.

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U.S. markets were basically flat as investors focused on commodity, housing and bond markets. The only news of any note came from Yahoo! Inc. (NASDAQ:YHOO) where a management shake-up is underway.

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Overseas markets continue to run hot seemingly unaffected by some of the negatives in the U.S.

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D Fry Market Outlook 19 06 2007After the big run-up Thursday and Friday, markets are entitled to take a Monday break. Oil prices and interest rates seem to have given bullish investors some pause. But it's a long week ahead. Energy inventories are due on Wednesday, and that could shake things up. And there continues to be fall-out from subprime issues that are dripping-out everyday, as this Bloomberg article notes.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in: United States Oil Fund ETF (NYSEARCA:USO), PowerShares DB Energy Fund (NYSEARCA:DBE), PowerShares DB Commodity Index Tracking Fund (NYSEARCA:DBC), streetTRACKS Gold Trust ETF (NYSEARCA:GLD), PowerShares DB US Dollar Index Bearish (NYSEARCA:UDN), First Trust DJ Internet Index ETF (NYSEARCA:FDN), iShares MSCI South Korea Index Fund ETF (NYSEARCA:EWY), iShares Trust FTSE-Xinhua China 25 Index Fund (NYSEARCA:FXI), iPath MSCI India ETN (NYSEARCA:INP), iShares MSCI Brazil Index ETF (NYSEARCA:EWZ).