Friday Outlook: Commodities, Emerging Markets

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Sometimes you eat the bear and sometimes he eats you. That’s an old expression with the former being today's reality.

This bear market rally is wild with over 450 points on the DJIA in just two days as just one example. One thing with bear markets is how hard and long you work to build profitable positions that Da Boyz can take from you in just a few days if you’re emotional. But you must remain disciplined and systematic. That’s not an easy thing for most investors. Frankly, many are just happy to rest on the sidelines and watch the carnage and that’s understandable. But folks like us must do our thing.

Today is options expiration. Remember this market is being run and manipulated by professionals whether in the government, trading desks, hedge funds or on the options floor.

Have a pleasant weekend.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in SPY, SDS, MZZ, IWM, TWM, QLD, QQQQ, XLY, SCC, XLI, SIJ, XLB, SMN, IYR, SRS, GLD, DBP, DBA, DAG, EFA, EFU, EEM EEV, EWZ, RSX, FXI and FXP.

Comments

[calvino:]

Thanks.

2008 Jul 18 08:44 AM

[Jimmy Lathrop:]

Another outstanding article. Thank you very much.

2008 Jul 18 09:46 AM

[Emerald:]

Very enjoyable and informative from a trends perspective. Keep up the good work.

2008 Jul 18 11:36 AM

[adan:]

ditto all the above, plus, great thanks for being one of the consistent reminders of how our own tax dollars are being used to goose the market to benefit the few

history will not be kind i believe

2008 Jul 18 12:38 PM

[Russ Abbott:]

Hi Dave,

For those of us who don't have your background, would you explain how "da boyz" make money pushing the market up and down.

Thanks.

2008 Jul 18 03:38 PM

[David Fry:]

Thanks everyone for your comments. I just don't have time to respond each day with trading and commentary, but I value your feedback whether favorable or otherwise.

First, one person asked if I had heard from ProShares regarding how they do their thing. I posted a response and directed that person to their website and a Investors Business Daily article/interview with Mike Sapir, CEO ProShares. Basically, they use futures and other derivatives that are highly correlated to each product sector to achieve their goal in addition to index products and components.

How do "Da Boyz" make money? Well, they have incredibly deep pockets and are able to push markets one way or another as "price follows volume" generally. So as I'm doing some trading in the futures markets using short-term charts I try to spot "size" and follow rather than fight it.

Someone else inquired about my "lines" on the charts and how that works. If you pay me some serious money I'd consider telling you, LOL.

Again thanks everyone!

2008 Jul 18 05:08 PM

[SwingTimer:]

Good observations...witty sarcasm...most enjoyable! But an OPINION re prospects for the next week or two - based on your experience - would be welcomed.

2008 Jul 20 04:18 PM