Tuesday Outlook: Commodities, Emerging Markets, Technical Indicators

<< Return to page 1 - Questioning This Rally




































Let’s look at a few overbought/oversold indicators:









I guess even Jamie Dimon, only a few days previously 'Superman', got a little ahead of himself.

What bear market rally?
What bear market?
What recession?
The data doesn’t support either quite yet.

For all the talk, the major indexes like DJIA, SPX and NASDAQ haven’t fallen the requisite 20%, even when at their lows, to qualify. As to recession, we’ll just have to wait and see.

The home sales data were spun by bulls to get everyone pumped-up.

The end-of-quarter is important to portfolio managers and they’ll do what it takes to ramp prices this week. Nevertheless the news cycle is unpredictable and often lethal.

Let’s see what happens.

Have a pleasant day.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in SH, MYY, RWM, IWM, PSQ, IEF, UDN, GLD, USO, EFA, EEM and FXI.

Comments

[phdinsuntan...:]

can you disclose what long or short positions you have in SH, MYY, RWM, IWM, PSQ, IEF, UDN, GLD, USO, EFA, EEM and FXI? Well I have some guess you are following the trends, sorry for my dead-bounce-cat curiosity...very usefull info, we all appreciate and enjoy your comments!

2008 Mar 25 08:53 AM

[Bylo-:]

David -
Another great post, thanks. I look forward to reading you every day. Great data.

2008 Mar 25 09:10 AM

[roblites:]

David, I'm a techie and am glued to charts ,volumes,etc. I have fouind that using an SPY overlay on each chart I look at indentifies ETF's that show very similar patterns and call them slaves to the S&P. I have similar experience with indidual stocks. So why buy XLE if it pattterns SPY. ( I'm noit sure that's the best example). So what I look for is divergence to the SPY. Paw through the charts of the top 100 in IBD. 80% all look alike. If there are black boxes all reacting to similar trends and accounting for 75% of the trading, everything becomes homogenized. The funny thing about them is they all use different equations but each is back tested until "IT WORKS!" That point of success means they ultimately all generate the same result which further feeds the similarities of market action by indivual stocks and ETF's.

2008 Mar 25 09:11 AM

[David Fry:]

Obviously no one would short SH or UDN now would they? But, thanks for your kind comments nevertheless.

2008 Mar 25 10:12 AM

[leh:]

David, thanks for the reality check. The happy horse (manure) fairies were in fine form last night on CNBC with Kudlow firmly convinced that happy days are here again for both the US stock market and the dollar--and that those wicked witches of the west, inflation and commodities, are both dead. Bernanke was all but anointed the patron saint of free market capitalism, that last said with a not so straight grinning face. Whatever kind of dust these guys are smoking, I want a kilo. The propaganda mill is in overdrive here as Kudlow & co appear convinced that can talk this market higher, and I hear Kramer crowing this morning about how it may be time to go back into the home market. Talk about the instant gratification generation--these guys have already discounted the recession, soaring inflation, and an all but diseased building environment. Quite an act to witness!

2008 Mar 25 10:42 AM

[leh:]

P.S. I bought puts on a home builder yesterday morning as it rallied to previous highs. Many smaller builders are facing bankruptcy, and the WSJ had a powerful front page piece last week profiling one of them in the Cleveland area. Very interesting article as it revealed that the sub-prime easy $$$ mortgages were absolutely behind the phantom housing boom in that area. As soon as the easy money began to dry up as lenders started tightening standards, the market fell off a cliff. What would Kudlow say about how the free markets functioned here in encouraging people to spend money they really couldn't afford?

2008 Mar 25 10:50 AM