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Investors aren't too happy with conditions overall and the image above plainly sums up the mood. If you stop and think about it you might conclude that we're just continuing the 2008 recession. Central planners and politicians captive to the election cycles haven't dealt with conditions forthrightly. Phony, ineffective and now corrupt stimulus packages haven't helped.

ZIRP and QE haven't produced more jobs or stimulated economic growth. From Europe to the U.S. government and central banker credibility is shot. Yes, we had a nice rally off the lows from March 2009 but we had those in the Great Depression as well. The "extend and pretend" policies are a hindrance with band-aids here and there. There's a failure of transparency as debt woes have been covered up from the euro zone to the U.S.

We need to let markets work and if that means hard times then okay. It would be better to get beyond these problems faster and more thoughtfully. The Fed should keep interest rates low as they've done. Congress and the administration can provide assistance to those in need rather than bailing out banks or providing stimulus to their crony capitalist friends. Eventually the animal spirits will take over and investors will return reinvigorated when the dust has settled. As cited previously, Alexander Hamilton wished to encourage greed and risk-taking but only within the "rules of the game". It's the rules we keep changing it seems.

That's my two cents worth.

U.S stocks plunged Thursday following through on Wednesday's losses and widespread 4% declines in Europe. It was take no prisoners all day as everything not bolted down was sold. Investors were bent on raising cash and got from where they could--gold, , oil, stocks and currencies. Only bonds were stronger but they hardly yield much after whatever inflation exists. There's a lot of duration risk in bonds but investors could care less about that in their panic.

The sidelines are the right place for most investors at present and that's where we are in our active portfolios. Some Lazy Portfolios are hedged but that will only protect you so much. We've shouted from the mountain tops about monthly DeMark 9s being present at the end of May. The reaction to them has a high degree of reliability. Even gold is producing DeMark 9s two weeks ago on weekly charts and now on monthly charts as well. This hasn't been a good market to "position" given volatility and normal risk management techniques. It's been a good market for day-traders and HFTs.

Volume Thursday was quite high and the only positive is stocks are probably at least short-term oversold. The only folks left in markets away from hedge funds and HFTs are those poor souls locked-in to 401Ks, IRAs and pension plans. Most others have left Dodge. Breadth per the WSJ was as negative as you might expect and was most likely a 10/90 day.

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Continue to U.S. Sector, Stocks & Bond ETFs

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Continue to Currency & Commodity Market ETFs

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TheStreet Recommends

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Continue to Overseas Sectors & ETFs

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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.

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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.

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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

Central planning has failed. Keynesian strategies have failed. We keep covering up bad debt with pretend accounting measures and gimmicks. Authorities and politicians wish to stretch things out given the election cycle and hope things improve. Dealing with serious problems with half-measures means you just extend the problems. Sometimes it's just as well to let things go; make those pay that are at fault including shareholders and bondholders. Let the free markets work. 

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: SH, EUM, EFZ, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, EWD, 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

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.