Thursday Outlook: Commodities, Emerging Markets

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The Fed and Treasury are in a box. The too long and low interest rate policies of Greenspan created the housing bubble and Wall Street [new product engineers, credit rating agencies and bond insurers] accommodated it with creative products no one understood or analyzed with any diligence. It’s all blown up in their faces. Letting Bear Stearns fail was an option but sometimes ego gets in the way of a painful and embarrassing event.

The previous stock rally now failing was suspect with hindsight due to the slack volume upon which it was built. We’re seeing Mr. Market take it apart.

Housekeeping notes: It appears my mailbox is full again and could be the result of a doubling of my inbox due to moving mail from my PC to laptop in advance of another trip. By the way, did I mention another trip? We’re heading from here to SF for an ETF conference and then LA for another. Should be fun and tiring but I’ll find some time to post.

Have a great day.

Disclaimer: The ETF Digest maintains positions in TLT and TBT.

Comments

[starvinsargent]

It must be a bear market when the talented Dave Fry's technical acumen is stated as "oh dear"

...running low on verbage Dave? VBG!

[johnthebear]

The bear market continues... and quickens. Have you used your 10 year chart and compared ^SSEC, EEM, FXI and the NASDAQ of year 2000? The China bubble is clear and I forsee FXI in 60-70 range by the fall.

Thanks for your charts, very interesting.

[Sidj]

So in China do they call bear markets 'dead monkey' markets?

[User 151885]

I'm far from an expert here but I've watched a couple of other market turns. And this time I really do think its different!
We are not in just a normal correction or business cycle. It is my opinion we are in the process of a global major trend change which will last for some time. Maybe a decade or so. There's a lot of house cleaning necessary worldwide.
Did anyone see the pictures of the collapsed buildings after the earthquake in China? I wonder how many buildings were built the same way just to get them up quickly and cheaply?

[GKM]

How pathetic. Morgan Stanley upgrades the financials to try to build a floor. When was the last time anything that came out of a bankers mouth was trustworthy? Someone help me out here please. MBIA and Ambac: "we're a-okay". Lehman: "we're raising capital because the market wants us to". What a joke.

MS must be worried about themselves and what might happen if things continue to deteriorate. To me they are running on the treadmill and its about to notch up to 10. Lehman's down 8% pre-market. How pathetic.

[Eric Fox]

Can you include ITB in your next analysis? It is another Housing related index.

[User 151885]

ITB looks oversold short-term just like everything else. Peak of 22.50 to 15.50. Basic guideline is to chart out potential retracement of decline. Start with .33 then .50 then .67. That way you can figure reasonable profit for your system while minimizing loss if the market moves against you.
$7.00 x .33 = 2.31 + 15.50 = 17.81. Divided by 15.50 = 14.9% gain.
Don't forget trading fees.

[Eric Fox]

Thanks Mr. User...hey pick a name for your comments on Seeking Alpha, it doesn't take that long to do.