NEW YORK ( TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next.

Here are three of his blogs from the past week.


Will Optimism Last?

Published 7/9/2010 5:14 p.m. EDT

A run in the market has emboldened the bulls and sent the bears cowering. Can it last?

In both the short and longer term, I think we're headed higher. Before we get from here to there, however, expect volatility along the way. The market won't settle into a stable upswing until investors get clarity on a few key issues.

First let's look at the short term. How do you beat expectations? Set the bar low and then leap over it. Going into earnings season, analysts have been slowly lowering the bar. A dramatic three months in market action raised questions about the strength of the recovery and the resilience of U.S. equity markets. Earnings estimates were lower. Companies like Alcoa ( AA), Google ( GOOG) and General Electric ( GE) underperformed the S&P 500 dramatically. The bears began bellowing.

Both investors and analysts have been running around in the dark without direction, bumping into data points and technical levels along the way. Just about anything was seen as a sign of where we're headed. Meanwhile, U.S. firms have been notably quiet. Just 65 S&P 500 companies provided early guidance ahead of this earnings season. Compare that number to the 92 and 100 S&P components that offered early guidance ahead of the previous two earnings seasons, respectively.

In the absence of guidance, market activity has been colored by one global crisis after another. A currency crisis in Europe had us fearing contagion. An oil spill in the Gulf of Mexico has sparked political and economic panic. Unemployment rates loom larger than life. In the background -- quietly -- U.S. firms have been regrouping and recovering. That's what we'll see next week.

More firms than usual will be reporting results in the first week of earnings, and results should set a trend. Next week we'll hear from Google, General Electric, JPMorgan Chase ( JPM) and Intel ( INTC), among others.

With the bar set lower by analysts, it's tempting to pick the most beleaguered sectors for a short-term trade. Shrouded by regulatory uncertainty, the financial sector has struggled. The Financial Select Sector SPDR ( XLF)ETF, which showcases marquee financial firms such as Bank of America ( BAC), Wells Fargo ( WFC) and Goldman Sachs Group ( GS), could get a serious lift if top component JPMorgan Chase surprises next week. Technology ETFs like iShares Dow Jones US Technology ( IYW) could get a lift if Google and Intel set a positive stage for the sector.

It's tempting to let out a sigh of relief, but investors can't relax just yet. Even if you're running with the bulls, keep looking over your shoulder. After all: BP's ( BP) well hasn't been capped, unemployment is still high, and Europe's entitlements won't end overnight. Looking beyond earnings, investors will continue to vacillate between good news in the U.S. equity market and undeniable issues such as unemployment. We're headed for economic recovery, but it's a slow trek upward that will require a clear head and a diversified portfolio.

Even in the age of high-speed electronic trading, human emotion is the great "X" factor in the economy. Gloom and doom have been pervasive, but positive earnings could quickly shift attention. While it may be impossible to predict how investors will react, it's easy to diversify and be well prepared. Have a great weekend.


Double-Dip or Bull Run?

Published 7/9/2010 11:08 a.m. EDT

Commentators have been arguing vociferously about whether we're primed for a double-dip or ready for a bull run. While jobs data may have been the last economic hurdle, earnings is the next , and everyone is eager to get on the "right" side of the trade.

Personally, I'm tired of all the extremes. The doomsday/bull-run divide makes for emotional markets and nervous clients. It seems like just yesterday that everyone said that Europe's economies and currency were on the verge of collapse. Now, not only has disaster been averted, but we've seen a significant upswing. Can such deep-seated problems be solved overnight?

I think we all know the answer to that one.

In the U.S., we've all been hung up so much on unemployment and reform that we've missed progress in the equities markets. Retail may be a mixed bag , but let's not forget that total retail sales last month were 3.1% higher than in June 2009. When you get caught up in day-to-day trading, you often can fail to see the big picture.

Looking to the week ahead and earnings results in general, try to take a step back to see where we are and how far we've come. Approach the long-term recovery and short-term uncertainty by mixing equity exposure with some defensive positions. ETFs like SPDR S&P 500 ( SPY) and PowerShares QQQ (QQQQ) (for equity) and SPDR Gold ( GLD) and iShares Barclays TIPS ( TIP) (for defense) are good picks to start with.

So will we get a double dip or a bull run? The answer is "neither." We will have a slow, steady recovery that is led by business and trailed by consumers. Expect to see plenty of volatility along the way as seemingly conflicting data send investors scurrying to be on the "right side." Rather than trying to be right, try to be responsible -- it's the only way to survive in today's marketplace.

At the time of publication, Dion was long QQQQ and TIP.


In the Energy Sector, Think Coal

Published 7/8/2010 2:30 p.m. EDT

With summer heat peaking, oil still spewing in the Gulf of Mexico and oil prices coming off lows, energy is certainly a hot investment topic. Instead of trying to anticipate intraday price movements in oil and natural gas with funds such as the United States Oil ETF ( USO) and the United States Natural Gas ETF ( UNG), consider a longer-term investment in the Market Vectors Coal ETF ( KOL).

Coal has come a long way from the dirty fuel that used to blacken buildings in major U.S. cities, and many investors remain unaware of its important role. Instead of focusing on coal as a fuel, consider its role in steel production.

Coking coal, a critical ingredient for iron and steel production, is in high demand in China. If we've learned anything in the past few years, it's that you've got to pay attention to what's in high demand in China. In China's rapidly expanding marketplace, demand for steel is nothing new. Recent developments, however, should have investors thinking about coal.

The costs of extracting and transporting domestic coking coal are rising in China. Simultaneously, industrial integration threatens to close the small mines that currently supply much of the nation's coal. With coking coal becoming harder to find, China is looking abroad to import.

Investors can gain exposure to the global coal market through shares of the well-balanced KOL. In addition to U.S.-listed firms like Peabody Energy ( BTU) , Joy Global ( JOYG) and Consol Energy ( CNX), KOL's portfolio includes global firms such as China Shenhua Energy and Bumi Resources. All of the firms in KOL's underlying portfolio are listed companies engaged in the coal industry that derive more than 50% of their revenue from the coal industry.

Improving "clean" coal technology and industrial demand in China will help to keep coal and related business in the limelight. KOL is a great way to gain exposure to a variety of global coal firms in one place.

At the time of publication, Dion Money Management had no positions in stocks mentioned.

-- Written by Don Dion in Williamstown, Mass.


A special note from Don: Put simply, I want to help you profit from ETFs. You don't have to be an expert trader -- there are potential profits for investors at every level. And I think there's no better way to jump into the world of ETFs than through my brand-new service, TheStreet ETF Action by Don Dion. Membership is limited, so click here to get in on the action!

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.