Dave’s Daily
by David Fry - July 13th, 2009 7:17 pm
MARKET COMMENT
Dave Fry’s ETF Digest, July 13, 2009
Meredith Whitney, one of Wall Street’s new rock stars, has seen the light and in a “if you can’t beat ‘em, join ‘em” moment put a buy rating on Goldman Sachs saying, it’s a buy in a bear market. Who can blame her? The company runs the US economy and so many confirming and negative articles are now appearing. The latest came from Rolling Stone and it’s hard to argue with the objective analysis and conclusion unless you’re just a shill for Da Boyz. Does anyone care or notice? It’s not popular to be a Cassandra on Wall Street.
As I wrote subscribers over the weekend, the bullish bias is ever present. Investment managers and trading desks are looking for reasons to buy at all times. You get light volume in the summer and it doesn’t take much to stampede the herd.
That said, markets exploded higher after her buy recommendation causing a short squeeze relieving recent short-term oversold conditions. Volume was July-light while breadth was overwhelmingly positive.
The McClellan Summation Index didn’t bat an eye today and continues its descent.
You have to expect these kinds of days. I can hear many market veterans mumbling, “Never short a quiet market” and that was true today. Bull’s are looking for any shred of news to rally on and Meredith provided it today. She probably didn’t expect this big a reaction but you never know. Once you earn a reputation, even if it’s only once, you’re put on a pedestal until you’re knocked off.
Goldman Sachs remains unabashedly a major force on the Street, in DC and with the Fed. The Rolling Stone article coupled with others recently should make your blood boil. It’s obviously been on our minds for several years given all our postings on the subject. GS will post earnings this week that should exceed their record profits in 2007, and they’ll do so by trading your tax money on the very junk of their own creation. You really can’t make this stuff up. Nothing is changing nor will it until people gain an understanding of just how the power forces in this country work. In the meantime, respect their power and accept the results. Hopefully some day there will be a reckoning.
Today was an oversold bounce. Perhaps Larry Kudlow, Jim Cramer and now Meredith Whitney are right.…
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Dave’s Daily
by David Fry - July 11th, 2009 12:22 am
MARKET COMMENT
Dave Fry’s ETF Digest, July 10, 2009
Investors need a fill-up no matter if they’re bulls or bears. So all we can do is get them earnings and economic data to push things one way or another. Today’s crummy Consumer Confidence data didn’t faze bulls too much or impress bears particularly. With volume summertime light it will be easy for trading desks to have their way with unsuspecting tourists. So be careful out there.
As stated, volume is light and breadth continues to breakdown at least on the NYSE versus the NASDAQ which continues to perform better.
Most July’s recently haven’t been kind to markets. Virtually all were followed by good performance in August. It’s a strange occurrence to note frankly. But that’s been the theme and this July is starting rough and down that same path.
Investors are looking for good news from both earnings and economic data. Thus far they haven’t gotten it and markets have reacted accordingly. Absent these, it will be a challenge to hold things together until the fall.
Via our friend Jesse from Jesse’s Café Americain is this article quite critical of China’s near future regarding inflation and civil unrest. You might find it an eye opener.
I guess we put up enough charts to make up for yesterday.
Have a great weekend.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, BWX, LQD, GLD, DBC, USL, DBB, EFA, EEM, EWA and FXI.
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
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Dave’s Daily
by David Fry - July 9th, 2009 6:36 pm
MARKET COMMENT
Dave Fry’s ETF Digest, July 9, 2009
I’ll make this brief today as there are appointments to keep. Tomorrow marks the end of the week and there will be more to say then.
The highlights today were weakness in the dollar and feeble bounce in gold currently more attached to oil; Alcoa’s failure to hold last night’s gains; news that Goldman Sachs will exceed its record 2007 earnings; a comeback of sorts for banks and materials stocks; and more second round stimulus trial balloons aloft.
Volume was ultra light but breadth improved enough to move stocks from their short-term oversold conditions.
Meanwhile, the trusty McClellan Oscillator continues to fall reinforcing the notion that the top is in for stocks.
This is all we have time for today. It seems clear that investors are now lost between fears of a resumption of the bear market downtrend and hopes for green shoots. Earnings should prove inspiring to one side or the other.
I’ll be back with a more detailed report tomorrow.
Disclaimer: Among other issues the ETF Digest maintains positions in: GLD and USL.
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
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Dave’s Daily
by David Fry - July 9th, 2009 2:56 am
MARKET COMMENT
Dave Fry’s ETF Digest, July 8, 2009
We had a lot more volume than we’ve seen recently. Short-term equity markets are much oversold while commodity markets continue to get hammered big time. The entire day can be summed up with just those two sentences.
But now we have earnings upon us and Alcoa is kicking things off with unremarkable results. Since they always have unique items in their earnings it’s often hard to judge their reports.
Below is the volume and breadth data with the former impressive while the latter continues its deterioration.
In the meantime it appears with hindsight that the falling McClellan Summation Index was tell predicting this downturn.
Markets are short-term oversold and could bounce at any time. Based on the McClellan Summation Index however, any rally could prove temporary. Now earnings are coming and Alcoa, despite losing around $5 million per day just to stay open, beat estimates. Bulls have bid the stock higher in after hours trading.
This behavior is what we’ve been witnessing for a long time—lower estimates to Armageddon levels and then beat. It becomes annoying after a while.
Nevertheless earnings are important and we’ve only just begun to see them roll out. Results can alter trends in a major way but today wasn’t pretty despite the late pop from those in the know.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, DBC, USL, GLD, EWA, EFA, EWJ and FXI.
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
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Dave’s Daily
by David Fry - July 7th, 2009 6:59 pm
MARKET COMMENT
Dave’s ETF Digest, July 7, 2009
I guess HAL has been deactivated and GS has lost this little memory unit. If you see it lying around, well hell, they’ll buy it from you no doubt. Or, worse, you might get thrown in the slammer since nobody, but nobody messes with the Da Boyz.
The green shoots have turned to pond scum as investors, currently sans HAL, don’t up from down. Volume is heavier on sell-offs while light on bullish days. In the meantime breadth data remains terrible.
The McClellan Summation Index continues to fall from high levels indicating the bull trend is over for awhile probably.
Okay, tomorrow we start earnings season off with Alcoa being first up as usual. Nothing much good is expected and the company always has a lot of unique items in their reports. But, it will give us an indication of economic conditions revealed in their statements excluding Wall Street spin.
Biden was shooting his mouth off the past few days regarding Israel’s right to attack Iran and how the administration underestimated the depth of the current recession. So he argued for another stimulus package—yeah, more spending, that’s what we need! He’s no doubt in Cheney’s old secret hideout but bound and gagged. The longer this administration rolls out nonsensical programs the less the American people like it. Don’t get me wrong, the Bush administration got a lot of things wrong domestically but these guys seem way over their heads.
But the goofiness doesn’t stop with Biden. The new CFTC chairman ruined commodity markets today with a trial balloon arguing for position limits on commodity positions. You know, get the evil speculators! What will they meddle with next? This dumb idea is in part what put commodity markets on its okole (OH-Koh-Lay: Hawaiian for your posterior) today.
For us, we have small positions and roughly 80% cash in portfolios. Which way next should prove interesting and earnings should tell the tale in that regard.
Now let’s hope Goldman finds its trading software so markets can return to their previous manipulative ways. The guy doing the best job with Goldman is Tyler Durden and his Zero Hedge blog. Goldman made the mistake of engaging with him which makes it even more fun.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, GLD, DBC, USL, DBB, EFA, EEM and FXI.
The charts and comments are…
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Dave’s Daily
by David Fry - July 6th, 2009 7:00 pm
MARKET COMMENT
Courtesy of Dave Fry’s ETF Digest, July 6, 2009
A lot is being written, at least in the blogosphere about the high frequency trading program pilfered from Goldman Sachs. (The first article is here and you can follow many more at other sites.)
The questions being asked are pointed and terrific. For example, is the recent downturn in volume because Goldman’s computers were shut down for fear they were compromised?
Of greater importance to average investors is a dirty truth is revealed. Give Wall Street banksters a gaming stake (TARP) and what do they do with it? They give it to their HAL 9000 to trade the hell out of markets. Would you like a free trading stake and the computer to do it? Even though it would be self-defeating in the end, of course you would.
Okay, enough about that although it should provide plenty of interesting reading. Today markets were wishy-washy on continued shrinking volume. That brought out the “stick save” crew (perhaps HAL activated) but market internals remain weak.
AMG Data, like Trim Tabs, keeps track of money flow to mutual funds and ETFs. You can see recent deterioration below (subscription required for more detailed information).
The McClellan Summation Index continues to show markets rolling over.
You can’t make this stuff up sometimes. Da Boyz on Wall Street own the markets and always have, but it’s never been this over-the-top and outrageous. It’s enough to shine light on this nonsense and see it for what it is—blatant market manipulation with taxpayer money. You won’t see much in the way of investigations because the powers that be are in the hood.
Now let’s move to earnings. July will feature a steady stream to please (spun as “better than expected”) and disappoint (just ignore those please).
The week’s young and so is the month. Let’s see how it plays out.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, RWX, BWX, WIP, DBC, USL, DBB, EWA, and FXI.
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Dave’s Daily
by David Fry - July 4th, 2009 4:00 pm
Dave Fry’s ETF Digest, July 3, 2009
Emerging Markets from Russell Fry on Vimeo.
Disclaimer: Among other issues the ETF Digest maintains positions in:
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell any security. Market sectors and related ETFs are selected based on his opinion as to their importance in providing the viewer a comprehensive summary of market conditions for the featured period. Chart annotations aren’t predictive of any future market action rather they only demonstrate the author’s opinion as to a range of possibilities going forward. More detailed information, including actionable alerts, are available to subscribers at www.etfdigest.com.
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Dave’s Daily
by David Fry - July 3rd, 2009 11:50 pm
MARKET COMMENT
Dave Fry’s ETF Digest, July 2, 2009
Maybe, maybe not—this is all I can say since bulls have repeatedly demonstrated their “energizer bunny” quality. Maybe over the weekend investors will forget about the sting of today’s drop as no doubt the powers that be will roll-out their spokesmen to cheer everyone up.
This action is why over roughly the past two months our cash balances have been high. Once we got the weekly DeMark sequential 9 counts we were expecting a reaction. Sometimes we just move in a herky-jerky manner sideways while in other circumstances we get an immediate impact. If the trends are very strong then the DeMark 9 can be blown away and that’s the tricky part—how to get back in. But, never mind that for now, let’s look again.
Volume has been higher on down days and you can assuredly know that breadth both sucked and blowed today.
The longer-term Summation Index (not updated with today’s data) no doubt restarted its recently paused rollover.
Our podcast/video interview with the EMM (Emerging Markets Monitor) should be posted sometime this evening or early tomorrow morning for you listening pleasure. These are smart folks and have done a good job in providing thoughtful analysis regarding global markets. You should listen despite some inferior sound quality.
Two articles caught my attention these past few days. The first describes how FNM and FRE are starting to provide 125% mortgage loans. Isn’t this type of activity what got us in trouble in the first place? The next is an amusing expose from the WSJ (subscription required) outlining the inner workings of our friends at the Federal Reserve. You can see clearly from it who’s running the show there and on Wall Street.
We’ve kept a large cash reserve (70% more or less) for some time now. It’s a defensive posture clearly and reflects our lack of confidence in the mixed signals markets are presenting technically. When this is the situation sometimes it’s best to stand aside until things become clear.
For those of you long the markets in general, Mr. Market didn’t give us a happy send off to our country’s birthday. But, let’s see what happens next.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, DBC, USL, XLE, DBB, EWZ and FXI.
The charts and comments are only the author’s view of market activity and aren’t recommendations to buy or sell…
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Dave’s Daily
by David Fry - June 25th, 2009 8:24 pm
Dave Fry’s ETF Digest, June 25, 2009
Okay, sometimes it’s good to miss a couple of days. Everything and nothing has happened. Yesterday it was the amazingly boring and meandering Fed statement that had a little something for everybody. (How many “buts” can you stuff in this thing?) The bullish headline writers wrote many over the top gems claiming the recession is over per nuggets they gleaned.
Okay but not much happened really.
Today all the bad employment data was ignored with bulls focused on a few odd things. Bed Bath and Beyond “beat estimates” (folks need new towels and stuff. Or, was it the heavy expense cutting?) and economic growth, while still in the toilet hadn’t been plunged yet so to speak. Finally, some headline writers dubbed Bernanke a “rock star” as bulls hoped he would be reappointed.
Is that a good thing?
Impressively, volume picked up today as markets were short-term oversold and shorts remain easily squeezed. Breadth was quite positive. The hedgies and trading desks just continue to pick each other’s pockets as the games continue. And, after all, we are approaching the end of the month and bonuses need serious protection.
The McClellan Summation Index continues its decline. Now some have asked for the dates to be placed on the chart. That would entail adding another confusing chart to the mix and explaining it. Suffice it to say this is a “daily” chart and covers a year.
Games? Sure, there’s a lot of that going on especially over the past few months. Trading desks and hedge funds dominate markets. Short sellers get squeezed mercilessly. Those long the markets with tight stops get ripped. Trend followers who are long get their patience and disciplines tested. Those with heavy cash positions feel smart one day and stupid the next. We’re in the latter two categories. It’s been that kind of market.
What can change this?
We could have honest data from authorities and honest reporting from the financial media (thank God for the blogosphere!). But, we will also have real earnings coming next month and earnings still drive stock prices ultimately. Continued light volume through the summer will only continue games being played since the Street and trading desks are awash in liquidity. Insiders need to stop selling and start buying. Consumers need to buy more than new pillow cases and soap. Home prices need to start rising…
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Dave’s Daily
by David Fry - June 22nd, 2009 7:27 pm
MARKET COMMENT
Dave Fry’s ETF Digest, June 22, 2009
The story is front and center: GS is reported (later denied) able to pay huge bonuses to employees this year. (Guardian story is here.) How can this happen especially now? TARP money to trade with thanks to US taxpayers. Warren Buffett and Senator Dick Durbin knew exactly what was going to take place when they invested with the in-crowd. They, and other insiders, got the vig and you got the tab. End of story. It’s as simple as that isn’t it?
Today was a rough day to put it mildly as markets tumbled hard on reports from the World Bank that growth (also known as “green shoots”) will be er, “worse than expected”. This news crushed previously healthy commodity and stock market rallies.
Volume picked up and breadth was awful.
Perhaps “the tell” was the rollover in the Summation Index as demonstrated in the chart below. It can rise to 1200-1400 and stay there for longer than you can imagine before it rolls over. Then a top is often the result. “Sell in May and go away?”
The rollover in the McClellan Summation Index probably indicates a temporary top is in. Does that mean we drop like a stone? Probably not despite the negative 200 point DJIA day. Will we get just a tiresome trading range? Possibly. But, we have the end of month and quarter in front of us with earnings beginning next month. Perhaps bulls will see more green shoots or not. It just doesn’t seem many folks are involved in markets beyond Da Boyz.
Speaking of them, it’s pretty amazing to see a report of massive bonuses forthcoming despite the corporate denial. What tin ears these guys have! The other thing that’s disturbing is the level of insider information that passes from officials to their pals. Buffett is an insider period and has sat in on many meeting with Fed and Treasury officials. It’s unseemly for him and others to parlay that to gains unavailable to others. It’s said amusingly that Geithner has Pimco’s Bill Gross on speed dial. Further, should politicians like Durbin and others with inside information from the Fed and Treasury invest with those capable of gaining on their behalf?
The great news for those following this is that my wife and I visited her oncologist today and she gave her the news she wanted to hear—no chemo…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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