"Pardon me, but you must admit, that just now, an unpleasant distrust, however vague, was yours. Ah, shallow as it is, yet, how subtle a thing is suspicion, which at times can invade the humanist of hearts and wisest of heads.
enough. I but seek to be grateful; if my information leads to nothing, you must remember the motive."
The Confidence Man
It's a con plain and simple. I've bought into it because I must. Overall we're long and will be until the jig's up. Until then, I've advised subscribers for many months that our Lazy Portfolios are the path to success as Fed policies steamroll most technical systems beyond HFTs
high-frequency traders. When it ends, and it will, it's back to business as usual.
Earnings have been good, especially for companies (MMM, KO, MCD and etc.) where a weak dollar has led to grand overseas profits. Most of those gains remain stashed abroad and will remain there until U.S. corporate tax policy changes--a cold day in hell IMHO.
Further, Fed policies have been positive for financial engineering, M&A, corporate debt financings and stock buybacks. This is the result of a sea of liquidity finding its way to Wall Street which trickles down to S&P 500 companies. It leads to minimal gains in U.S. employment as companies are stimulated to outsource work overseas. It does not lift real estate prices off the deck either.
The great con remains current inflation, which Bernanke alluded to briefly in his comments today. They cling to "core" inflation as their measure of choice while we commoners who shop everyday for essentials know better. Turbo Tim even had the nerve to say the other day high gas prices are something we'll just "adjust to" and "won't hurt" the recovery. He has a government car and driver. He also had the nerve to reiterate the necessity to maintain a strong dollar. Yikes!
The Fed expects GDP to grow between 3.1 and 3.3% this year. Thursday's GDP data may serve as a guide although expectations are for a weaker report.
It's been a strange week as the dollar continued to slide, commodities rallied and stocks moved higher on ultra light volume. As to the latter, where is everybody? Most retail investors are content to hang on to their IRAs and 401Ks but they're still distrustful of markets. From the data it seems they'd rather have a new car or TV which is something they can trust. Current trading patterns remain dominated by HFTs whether from institutional trading desks or hedge funds. This is the way we've rolled since QE2 began.
>>To learn more about trading ETFs, check out Dave's ETF Digest Video Tour.
Now on to the daily analysis.
Volume on Wednesday marked another light trading day while breadth per the WSJ was quite positive.
You can follow our pithy comments on
and join the conversation on
Continue to U.S. Sector, Stocks & Bond ETFs
Continue to Currency & Commodity Market ETFs
Continue to Overseas Sectors & ETFs
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.
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.
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
Obviously, you have to be of two minds to deal with markets. On the one hand, if your role is to make good returns for your subscribers, you have to be in the markets; but, you don't have to like it either. That's the way I feel--long but not liking the BS and outright lying.
Sure, many companies are reporting great earnings but again, most of this is the result of a weak dollar and a tsunami of liquidity from the printing presses at the Fed. The lying is plain for all to see as it applies to statements "we want a strong dollar" and "inflation is transitory or at the core tame". Any person with a pulse can recognize this so I don't think this conclusion is too harsh.
One thing is true: Bernanke wants a higher stock market, and he's getting it. It means riches for the corporate chieftains and perhaps jobs for everyone else that haven't been outsourced. For my thinking it's a con game and so far they're pulling it off.
Thursday is Jobless Claims, GDP and Pending Home Sales. Naturally, more earnings will be on display.
Let's see what happens.
Disclaimer: The ETF Digest maintains active ETF trading portfolio and a wide selection of ETFs away from portfolios in an independent listing. Current positions if any are embedded within charts. Our Lazy & Hedged Lazy Portfolios maintain the follow positions: VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, BWD, GXG, THD, AFK, BRAQ, CHIQ, TUR, & VNM.
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
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
, Dave's Daily blog and the best-selling book author of
, published by Wiley Finance in 2008. A detailed bio is here: