Dave's Daily

By Dave Fry, founder and publisher of ETF Digest and author of the best-selling book Create Your Own ETF Hedge Fund. January 29, 2010

THERE'S SOMETHING ON THE WING!

If you're old enough to remember this Twilight Zone episode where William Shatner tried telling all who would listen that "there was something on the wing" but only he saw it.  The poor way the market's behaving almost seems like something terrible is about to happen and only Mr. Market sees it.  The bottom line is markets are tremendously oversold short-term but aren't responding well to defibrillation (good news from any source).  This is a bad sign.

Friday marked the end of the month where many suggest as it goes so goes the year.  But, last year proved an exception even though February was ugly.

Friday's volume was again heavier than average and breadth was once again negative in all markets.

 

Continue to Major US Markets

Continue to US Market Sectors & Bonds

Continue to Currency & Commodity Markets

Continue to Overseas Markets

Continue to Concluding Remarks

"There's something on the wing"?  That really dated but I do remember that episode vividly.  There is something wrong when economic data and earnings news is positive and stocks sell-off.  Perhaps it's just the correction many concede is much needed.   Hopefully that's all it is and not something more menacing.  The most logical explanation is a double dip recession that will put stocks on hold or resume the previous downtrend.

It is the end of the month and sometimes it's helpful to step back and analyze monthly charts to get a different and longer-term perspective.  That's why many are featured in this commentary.

Speaking of monthly charts below is a monthly chart of the SPX annotated with Tom DeMark counts.  Please take note of the "9" counts (circled), which from a monthly view, should indicate "trend exhaustion".  You can see their effectiveness.  Their appearance is one reason we have few positions.

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

 

Disclaimer:  Among other issues the ETF Digest maintains positions in: GLD and little else.

 

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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