Friday Outlook: Commodities, Global Markets

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That’s it for the Fryguy this week. Today is the always entertaining options expiry where strange things can happen. Traders aren’t paying too much attention to economic news. Whatever bad news there is gets dismissed as so much inconvenient old news. Rather, bulls are focused like a laser on oil prices and dollar action believing a repatriation by US investors and move by overseas investors to the greenback is US asset supportive.

My own opinion is that Da Boyz are just picking each other’s pockets.

Have a great weekend.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in IWM, QQQQ, QLD, IBB, XLP, UGE, XLV, RXL, UUP, DRR, GLD, DZZ, DBC, DEE, USO and XLE.

Comments

[User 160390:]

Sure is a strange market. Everything's about oil prices, regardless of inflation. I for one will not buy financials; but it seems just as risky to short them right this week.

2008 Aug 15 08:18 AM

[David White:]

How much of a run do you think we are likely to get in the dollar? I think this will be dependent on how much we spend on oil imports. Still the news from PG&E and SPWR yesterday was very encouraging. Hopefully the Congress will maintain the solar tax credits at least until the solar sales really take off in the US.

In your opinion, what is the best way to play the likely further rise in the dollar (other than the Forex)? There has been bad economic news from Japan and several European countries lately. It does seem likely the dollar will rise against those currencies for the near future, especially if we can spend less on imported oil. To really see how much we are spending on imported oil, all you have to do is look at Dubai. That money is coming from somewhere.

Do you think the FOREX may be a good idea for an area to make money as the US dollar likely rises? Or are the ETF's a much better idea for the non-Forex experts?

2008 Aug 15 08:42 AM

[gabe borens...:]

Yesterday was not a pocket picking day. It was a rude awakening by the market bears that the reality is more optimistic than their doom self serving prognosis. The recession frequently discussed ,had been avoided but is priced in to the market prices. The stock market in the process of consolidation is ready for a major rebound,perhaps enhanced by the major short covering.There should be no doubt amongst objective investors that the key issueshave been and are being addressed. Major banking insitutions had written off the "questionable assets and exposure "although some marginal adjustments may be necessary. Some of these "write offs "will come back as the profits in the period ahead. Bond insurers denegrated by one particular short ,have shown substantial profits but were ignored by the market.Hopefully today'saction by the rating agencies reiterating the AA rating for MBIA and Ambac will bring the sense of investment reality into the pricing structure .Eventually the other segmernts of the financial sector will strenghten.
Housing sector while unnerving ,is consolidating as well with some pick up n sales.
Basically the U.S economy/market are in a maqjor phase of consolidation.
Europe and Emerging market economies are heading for a major decompression ,leading to record capital flows into dollar assets(flight to quality).These capital flows will cement the U.S economic/market record rebound.

2008 Aug 15 08:51 AM

[Sidj:]

Funny coincidence that the Olympics, Russia's invasion of Georgia and the sudden surge in the dollar all occur at the same time and the leaders of these countries all happen to be together in China. Doesn't a stronger dollar help China too?

2008 Aug 15 08:51 AM

[kkin365:]

Given that UYG doubles the action of XLF (I have no position nor knowledge in either), as you say, it is difficult to see in the two charts you provided on these two stocks. Assuming that the 2 charts have the same scale, it appears that the volatility in UYG is higher than that in XLF. Why so, when the reverse should be the case?

2008 Aug 15 09:36 AM

[David Fry:]

UUP or DRR are so far the best way to play the dollar's rise from an ETF/ETN perspective. There are plenty of new issues in registration that will become available soon. Even with some of the 2/1 levered issues that is still well below conventional currency trading schemes [options, futures, etc].

The volatility in SKF/UYG has much to do with the SECs restrictions on naked short selling which created a logical, if not effective, boost to SKF. It's hard, given the volatility, for these issues to perform perfectly. Nevertheless, it's good to have them.

And, Gabe.....think what you wish. It's been a market for the pros over the past month. As a trend-follower we'll go with the trends as silly as they may seem sometimes. You're a bull and good luck to you!

2008 Aug 15 10:45 AM

[User 47441:]

Always learn from these insightful comments

2008 Aug 15 11:17 AM

[J. Fredrickson:]

Larry Kudlow is that you? I thought you were on vacation? Must be bored and ghost writing as "Gabe Borenstein" on Seeking Alpha's Fry Guy Board. I respect different opinions, but for some reason I find yours repulsive, as in, it sounds like the government spin put upon the American people to make them believe that everything is "fine", "okay" or "alright." When this fantasy ends and the reality becomes more apparent everyone can start making more informed decisions, but due to government "shenanigans" and a fear of "truthiness" this may take longer then anyone expects. I agree with David, "good LUCK to you."

2008 Aug 16 02:05 PM