Gold Is Golden -- Call Now!: Dave's Daily

Gold and silver markets don't rally because there's some shortage of the stuff. It's because investors have little confidence in paper money, debt and deficits.
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One big story Tuesday was U.S. markets did okay in the face of heavy overseas selling from negative morning after views on the European bailout.

The bigger story was impressive rallies in both gold and silver markets. These markets don't rally because there's some shortage of the stuff rather it's because investors have little confidence in paper money, debt and deficits.

Volume is starting to tail-off in U.S. markets while breadth was mixed.

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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 NYMO is now "just" barely in neutral.

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Per Investopedia: 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 Summation Index is still showing conditions correcting.

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Per Investopedia: 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. Current conditions show stress still present but fear is easing.

Continue to Major U.S. Markets

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SPY

and many other major market sectors look primed for trading ranges going forward. That would be a negative environment for investors given lack of progress frustration.

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MDY

is doing well despite the steep drop which stopped coincidentally (?) at the 22 period MA.

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IWM

has more bullish gusto than most sectors but still looks like it could be in a trading range for awhile as markets heal.

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The

QQQQs

were the only major index to close higher on the day and a trading range would be really tight.

Continue to U.S. Market Sectors, Selected Stocks & Bonds

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Rumors swirl that one or more of Da Boyz (

JPM

,

MS

and so forth) have a massive short silver position on. That might set them back a bit.

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Continue to Currency & Commodity Markets

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FXE

,

EUO

,

UUP

are all ways to play the currency markets for retail and financial advisors.

FXE

would be a hard short but

EUO

and

UUP

are there for you to use.

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GLD, DGP, GDX

and

SLV

are all in the spotlight as a hedge against governments on crack.

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DBB

or base metals are the stuff economic growth is made of. When they falter demand is weak and so too is future economic growth.

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Continue to Overseas & Emerging Markets

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The

Shanghai CSI300

has fallen into bear market territory being down 30% from previous high in August 2009.

Continue to Concluding Remarks

It wasn't much of day when you look at daily charts in isolation -- but it was one helluva day frankly. First, it should amaze the average spectator the markets rallied at all with Europe and Asia falling hard on bailout skepticism. The markets that counted in the U.S., gold and currencies, also gave a "thumbs down" to the plans.

What happened then? The trading desks and HAL 9000s kept things propped in an orderly way. Main Street is turned off by the spectacle of disorderly and manipulated markets.

The senate voted to audit the Fed but defeated the more severe Vitter amendment so Fed governors breathed a sigh of relief. Exposing just what the Fed has done with our printing press and with whom would no doubt shock everyone.

There's not much on tap from economic data but earnings from Macy's and Cisco will be much in focus.

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

twitter

and become a fan of ETF Digest on

facebook

.

By Dave Fry, founder and publisher of

ETF Digest

and author of the best-selling book

Create Your Own ETF Hedge Fund.

Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, VTI, QQQQ, TIP, SHY, GLD, DGP, UUP, EUO, EFA, EEM, and EPV.

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.