Thursday Outlook: Sectors and International

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Meanwhile back at reform school, the problem children remain a hard case:

Commodity markets tell one story -- inflation:

Finally, in the “fame is fleeting” department, the Fryguy took some lumps today but we’re still doing okay on the week. Why anyone would buy INP with a 20% premium is beyond me.

Things are getting strange. Are stocks cheap? No, since PEs are above historical averages. Can the major averages rally significantly with sectors like financials, real estate and the consumer in the dumps? It doesn’t seem likely. Can the consumer feel good about things with the dollar being trashed, living costs soaring and the value of their homes taking a haircut? Nope.

On the other side of the coin officialdom, SWFs, trading desks and even some hedge funds all have their shoulders to the wheel trying to pump markets higher and improve psychology. Taken together they’re a powerful force. Add-in Santa and we could just churn about until the New Year.

No one is very happy with the manner in which the Fed and others are communicating with the investing public. It gives rise to conspiracy theories alleging market manipulation and other nefarious practices.

Make no mistake about it; this is a day-traders market. Position traders are lucky to keep their positions and not get ripped apart while buy and hold investors are doing just fine as they hang tough thru stormy seas. Should conditions get worse even the latter group will feel pain.

We get some inflation data today and then next week is options and futures expiry. Then, as we witnessed Wednesday, there’s that pesky and unpredictable news cycle -- these factors should keep everyone on their toes.

Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, DBC, DBA, UDN, GLD and [ahem] IFN.

Comments

[BenHoldsworth]

David, I always look forward to these reports and find them extremely helpful. However on your DBA comments, while wheat planted area was down in the US last year, that is no longer the case. Corn acerage is now down, wheat and soyabeans has increased and is expected to increase for 08/09. See the Dec. 11, 2007 U.S. Wheat Associates report for the latest, slide 56.
www.uswheat.org/supply...#

[granger]

Thank you for this report. I always enjoy it.

[David Fry]

Thanks Ben. I need all the help I can get keeping up. I guess I'm just reporting old news.

[EricPeterson,PhD.]

Intrinsic value for INP is available daily on Yahoo under the symbol ^INP-IV. Thursday's close: 87.82, and INP closed at 107.10. That's a silly 22% premium. INP closed down 0.7% and IFN down 3.4%, so the spread widened even further.