4/6/2008 - Wednesday Outlook: Commodities, Emerging Markets |
<< Return to page 1 - Bears Beware
Often when markets are much extended and when a new calendar
period starts, previous themes and trends can reverse--abruptly.
And, based on charts we’ve posted
here over many weeks, you could readily see how overbought/oversold some sectors
were. Yesterday the long commodities/short
financials trade was reversed if only temporarily.
Also, a key element within this trade
was being short the dollar and long precious metals which was also reversed.
While the dollar rallied somewhat, precious metals were crushed.
Let’s
see how far into the quarter they can take that squeeze play.
Bulls were aided yesterday by normal first of month money
flow and contributions to retirement accounts that investment managers invest
immediately.
Many pundits and media have been proclaiming a recession at
hand [some even suggesting we’re in a depression] and that we’re in
a bear napkin rings market.
Neither has
been born out by the facts or data yet.
This condition, and with market trends sideways for the past few months,
is why we’ve maintained cash positions exceeding 75%.
The Paulson letter is a real eye opener and confirms what
most surmised: that the full faith and credit of the U.S. Treasury is behind any
market meltdown. Bears beware.
Have a pleasant day.
Disclaimer: Among other issues the ETF Digest maintains long or short positions in SH, RWM, IWM, PSQ, MYY, IEF, GLD, USO, EFA, EEM and FXI.
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