Thursday Outlook: Not Drinking the Bullish Kool Aid

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 |  Includes: EEM, EFA, EWJ, FXI, IFN, IYR, IYT, RSX, XHB, XLF, XLY
by: David Fry

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Problem children are still finding uncertainty.

No, I’m not drinking the Kool Aid the government and Wall Street bullish talking heads are serving up. But, you have to accept Mr. Market’s version of things day to day.

That’s why, unless you’re a day trader, you have step back and look at things from the weekly chart perspective. Wednesday we saw more volatility and confusion. The latter is the result of investors understanding that the Fed is willing to accept inflation as the consequence of bailouts, lowered interest rates, political pressure and excessive money printing. I don’t think Bernanke ever produced an academic study based on these current conditions.

You can’t fool the boys in the Chicago bond pits too often but today they got a whiff of confusion from the data. Overall they smell inflation capitulation and don’t like it one bit. If there’s any flight to safety currently it’s in the commodity pits since some people want to own real things rather than smoke and mirrors.

Have a pleasant day.

Disclaimer: Among other issues, the ETF Digest maintains long or short positions in SH, PSQ, DBC, DBA, GLD, and IEF.