Editor's Note: 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. Fry has devoted over 35 years to the business of trading and portfolio management. Check back each morning for the latest installment of Dave's Daily to get a unique ETF market overview.DAVE'S DAILY MARKET COMMENT

December 8, 2009

Image placeholder title

NO STICK SAVE TODAY

The market headed down out of the gate this morning following Asia and Europe and mixed-in with Dubai worries; country credit rating downgrades; and, a strengthening dollar which weakens the "dollar carry trade".  But then the president made

a curious speech

stating among other things, "We must spend our way out of" this recession.  Since this White House, like so many others before, read poll data and with the public very much against more spending and higher deficits, it made no political sense and perhaps exacerbated further selling today.  And yes, that's just a guess; but, the 2:15 Buy Program Express didn't make it out of the station today.

Before the open this morning, came a bullish prediction from GS:  "The S&P 500 may rally a further 13 percent to 1,250 by the end of next year as interest rates remain low, revenue grows and investors pour money into U.S. stocks.  Continued profit margin resiliency from prior aggressive cost reductions should drive strong returns in early 2010 and push the S&P 500 towards 1,300. Equity investors will begin to rush for the proverbial exit ahead of what consensus believes will be the start of an interest rate tightening cycle." 

So, the rally we've seen is based on

financial engineering

but not job growth or

real production

gains.  At least that's what one can infer from the prophets on high at GS as they continue "God's work".    

Volume was heavier than yesterday which isn't saying much while breadth was highly negative.

Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title

TST Recommends

Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title
Image placeholder title

A weak day as Dubai's problems resurface and the dollar rallied accordingly.   This challenges the previous cozy "dollar carry trade" where commodities and higher beta EMs prospered.  Perhaps it's just a temporary correction in that trend especially coming at this year-end period where traders hope to close their books and go on holiday.

Again, there's not much economic data until Thursday and Friday.  Until then we'll get more jawboning from the Fed, Treasury and, I guess, the WH.

Let's see what happens and you can follow our pithy comments on

twitter

.

Disclaimer:  Among other issues the ETF Digest maintains positions in: VTI, XLB, XLI, XLY, IYR, IVE, TIP, GLD, DBC, and EFA.

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

.