It Takes a Village: Dave's Daily

"In for a penny, in for a pound" is the appropriate label for global monetary policy.
By Dave Fry ,

I suppose the above shouldn't be the theme of the day as stocks continued to rally, but it struck me this way. The

Chinese said

they were taking measures to support the euro and euro zone last night while

Bernanke

finished the "one-two" by extending U.S. support (money) to the ECB and others through August. (Wait until Ron Paul gets at him in the new congress--great theater!)

Meanwhile stocks continued their light volume Santa rally as financials soared reversing yesterday's AXP blues. It appears Canadian financial institutions armed with better financial conditions and a stronger Loonie can pick-up U.S. institutions at good prices. Tuesday Toronto Dominion Bank paid $6.3 billion to acquire Chrysler Financial. In tech land Adobe and Jabil Circuits both led the sector higher.

With the exception of gold (flat) most commodities rallied on the belief economic growth will stimulate demand, aided of course by Bernanke's stimulus. Don't look now, but the next time you buy gas or pay your heating bill it will upset you; but, that's what the Fed wants--higher prices.

We worried Monday about Municipal debt in particular yesterday. For it to be resolved there will have to be a massive reduction in public union benefits and/or workers. That's the only way out and it no doubt will happen. Nevertheless, keep those coupons clipped just in case.

Volume remains abysmal but no one in the media wants you to notice since this won't be on your brokerage statement doesn't affect WS bonuses. Breadth per the WSJ was quite positive.

Continue to U.S. Sectors, Stocks & Bonds

Continue to Currency & Commodity Markets

Continue to Overseas Markets & ETFs

The

NYMO

is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. When readings are +60/-60 markets are extended short-term.

The

McClellan Summation Index

is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends. I believe readings of +1000/-1000 reveal markets as much extended.

The

VIX

is a widely used measure of market risk and is often referred to as the "investor fear gauge". Our own interpretation is highlighted in the chart above. The VIX measures the level of put option activity over a 30-day period. Greater buying of put options (protection) causes the index to rise.

Continue to Concluding Remarks

"In for a penny, in for a pound" is the appropriate label for global monetary policy. Once authorities have gone down the road of bailouts, printing money and taking over private companies they're just not going to stop. This is the way they're going to roll and accepting this is the order of the day if you wish to make money. One day the music will stop and all hell will break loose. The start of 2011 has "sell" written all over it, but that's just my knee-jerk opinion. The Fed's

POMO

(two more today) actions continue apace and much of this money goes directly to the Primary Dealers and into the markets. There's no law or contract that says this must be, it's just the logical result.

It's not unusual for volume to be low at this time of year but never this light. Perhaps when holidays actually begin or on half days you'll see this probably beginning Wednesday and surely on Thursday.

Let's see what happens. You can follow our pithy comments on

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Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, MDY, IWM, QQQQ, XLF, XLI, XLB, UYM, TBF, GLD, SLV, DBB, DBA, JJC, XME, KOL, EFA, EEM, EWJ, EWA, EWC, EWZ, EWY, & 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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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

Dave Fry is founder and publisher of

ETF Digest

, Dave's Daily blog and the best-selling book author of

Create Your Own ETF Hedge Fund, A DIY Strategy for Private Wealth Management

, published by Wiley Finance in 2008. A detailed bio is here:

Dave Fry.

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