March 19, 2010



Quad-witching fun and games often obscure other issues.  This type of day is loaded with mechanical gyrations that have zero to do with fundamentals.  It's particularly true as the trading day ends since many are scrambling about trying to meet and match their delivery obligations.   It's just the way things work and Friday was no exception.

But, there was more serious news as India raised its interest rates and many now are saying the Fed will increase the Discount Rate yet again before their next meeting.  Further, the health care bill is theoretically (I'll believe it when I see it) heading toward a conclusion on Sunday.  Many are starting to believe it will cause a major market sell-off.  I'm ambivalent regarding the latter since, despite Friday's action, the tape is in good shape and many think a bill (whatever the hell it is) will pass.

There are also Treasury bond auctions on tap and those will stay with us for a long time.  Finally, Greek issues and worries returned to the fore allowing Uncle Buck to rise and commodities (gold and oil) to fall sharply.

Volume increased Friday which is normal for this type of day while breadth was negative per the WSJ.

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Continue to US Market Sectors, Stocks of Interest & Bonds

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Continue to Overseas & Emerging Markets

Continue to Concluding Remarks

This was an uncomfortable week all things considered.  Greece still lingers unresolved; the US administration is determined to pass a health care bill no matter what's in it or how the public feels about it; stock markets are still overbought; unemployment remains high while home sales data is weak yet the consumer is supposedly shopping like there's no tomorrow; commodity markets aren't reflecting economic growth; India, China and rumors of the US raising interest rates exist; wars are raging and so forth.  But, the bottom line is markets are still in good shape supported by the punchbowl until it's gone. 

The games played with expiration are only a spectator sport for most investors.  It's a mechanical event riddled with games as nothing is what it seems.

Next week will feature a couple of days of Home Sales data and Durable Goods to get the week rolling.

Let's see what happens.  You can follow our pithy comments on twitter and become a fan of ETF Digest on facebook.


Disclaimer:  Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, XLY, XLF, XLI, IYR, IVE, UUP, EWC and EPI.


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