Dave's Daily: Stocks Take a Dive - TheStreet

Dave's Daily: Stocks Take a Dive

Dave's Daily observes that It's no surprise markets fell Thursday.
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Dave's Daily

By Dave Fry, founder and publisher of

ETF Digest

.

January 21, 2010

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Stocks Take A Dive

It's no surprise markets fell Thursday.  For if the government is going to start micromanaging basic trading, it will just go elsewhere.  Perhaps more accommodating far off lands like Dubai (they have space), Switzerland, Singapore and Hong Kong.

I've written for a long time about the evils that sprang from repealing Glass-Steagall in 1999 which had barred brokers and banks from joint operations and ownership.  (Fox in Hen House)  Add to this the inclusion of putting the CRA (Community Reinvestment Act) on steroids and it's no surprise Wall Street new product engineers would develop products (subprime) to accommodate the new mandate to lend to those previously unqualified to buy homes.

The deed is done and we see the results--two bubbles and two bear markets.  The question now is the toothpaste out of the tube?  Can these monsters be broken up and still survive independently?  (Would Merrill Lynch be a good firm again once spun off from BAC?  Would Smith-Barney survive and thrive away from Citigroup?)  I think they can but not without a fight.  But the threat of the chaos is negatively affecting markets in the short-run. 

That said, Thursday saw a heavy volume sell-off with highly negative breadth as noted by the WSJ below:

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Continue to Major US Markets

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Continue to Major US Market Sectors & Bonds

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Continue to Currency & Commodity Markets

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Continue to Overseas Markets

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Continue to Concluding Remarks

Both Google and AMD reported results that beat estimates but there's nothing new in that achievement of late.

Both stocks we sold down in after hours trading according to this MartketWatch summary:

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I've been traveling all day just arriving from the warmth of Atlanta back to the north country.  So I'm a little pressed for time.  Most subscribers and readers know we went heavily to cash two weeks ago as DeMark Monthly "9" counts registered along with the same readings on weekly and daily charts.  This usually means a reaction would occur of some sort.  Perhaps we're now getting it.

As to Glass-Steagall, I'll have more to say about it on Friday.

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

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Disclaimer:  Among other issues the ETF Digest maintains positions in: XLU, GLD 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

.

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.