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First, why do we depend on these fee-conflicted rating agencies who have dropped the ball repeatedly?

Answer: because there are no other non-fee conflicted rating (ratting?) agencies that have also made serious mistakes. Is there something from S&P today regarding U.S. debt we didn't already know? Hardly, so no Black Swan here. We've just been on an "extend and pretend" path to see how much money we can make before "the you know what" hits the fan. And, for all we know denial will continue and we could close this week higher as we shrug this off as something "down the road".

As we enter a short week, and with markets already weak from the get-go, the S&P outlook for U.S. debt as "negative" blind-sided investors. Markets sold-off sharply but then recovered much of the damage late which should surprise given the pervasive dip buying mentality.

Bonds initially sold-off then rallied (the down the road mentality) while commodities were mixed with energy falling despite a cut in crude oil output by the Saudis while precious metals and grains higher. The dollar rallied off its critical support as investor's repatriated money, not necessarily to safe parking, but maybe to cover some margin calls.

Some believe, and I have no credible information on this other than chatter, the Fed is selling puts on U.S. debt to pin interest rates lower. That's an interesting strategy and could consume an entire posting and then some.

Earnings were posted for

Citigroup

(C) - Get Citigroup Inc. Report

and given all the adjustments, accounting games and what not, reported lower than expected revenues but beat earnings expectations by penny. The stock was flat and the reverse split will be coming shortly along with the symbolic penny dividend.

The market remains extraordinarily manipulated. Note the headline DJIA ("the window dressing for the tourists") reclaimed the 50-day moving average. Volume was much higher on the sell-off as stops routinely get hit on these event-type days. As you would expect, breadth per the WSJ, was clearly as negative as you would expect.

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 Continue to U.S. Sector, Stocks & Bond 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

I've not seen this much market manipulation in nearly 40 years of being in the business. But, here's the deal in my opinion--as long as Uncle Sugar is feeding the trading desks either go with it or stay away. Shorting the beard is not an option in this environment...yet. It will be there for you someday, wait for it. When and if QE ends and/or bond vigilantes (including our creditors) seize control of trading then you can take your safety off.

Earnings after the bell include a poorly received

Texas Instruments

(TXN) - Get Texas Instruments Incorporated Report

report trading down 2.5% as this is written.

Housing Starts data Tuesday and more earnings on parade will be dominant. It may very well be another Turnaround Tuesday as memories about S&P quickly fade and POMO resumes.

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

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.