A Tragedy of Epic Proportions: Dave's Daily

No Mr. Wise Guy today. The world is facing two crises in Japan and MENA. The nuclear issue in Japan appears out of control. At the same time, this tragedy is masking what's going in MENA as Gadhafi takes control and in Bahrain where the weird Sunni/Shiite battles rage. With the latter, it's like a primitive religious war the west experienced centuries ago (save Ireland) with Catholics fighting Protestants.

Where is the president? This has been a universal question raised by both right and left. Obama appeared on ESPN to go over his NCAA basketball bracket, is hosting a $30K a plate fund raiser in Harlem and heads this weekend to Rio. The president's disconnect is beyond belief and his ears have turned to tin. Hillary Clinton meanwhile has announced she won't serve a second term as Secretary of State should Obama be reelected. Perhaps she'll serve as Vice-President to beef-up Obama's reelection chances; but, she hasn't distinguished herself in foreign affairs lately.

Last night the BOJ injected many trillions of yen helping markets rebound. With rapidly changing "current" news this may not occur tonight. Bulls hope for reconstruction that will help U.S. industries within materials and manufacturing sectors providing the stuff they need to rebuild. But, that's a longer term positive for U.S. markets. For now, we need to know how this situation will play out from a humanitarian and safety view.

The yen has hit fresh all-time high with repatriation paramount. Bonds are still climbing while crude oil rose and precious metals were up a touch. Other commodities were mixed.

Volume soared as stocks collapsed and perhaps now we're seeing a "wash-out" from which a good bounce can occur. (Like I said about yesterday's PM rally: "Wasted buying power".) Breadth per the WSJ was very negative as we reach much oversold conditions, at least on a short-term basis.

 

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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.

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.

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

It's first light in Japan now--it may be a glowing. Or, if we're all lucky, the power will be restored to reactors allowing for water to be pumped cooling things down. If not, then there's a meltdown with unknown but certainly bad consequences.

At the same time, in MENA things are truly violent with primitive sectarian (Sunni/Shiite) strife. In Libya, the leaders in the west don't know what to do. The president is AWOL and the secretary of state is befuddled. This may come off as partisan but it seems fair to me.

If it's business as usual, we'll note a reaction to Jobless Claims, CPI (snicker), Industrial Production, Leading Indicators and the Philly Fed. Most of this will be old news obscured by current conditions in the headlines.

I haven't a clue as to what will happen just admitting that our Lazy Portfolios are hurting but elsewhere we're either in cash or mildly short.

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

Disclaimer: Among other issues the ETF Digest maintains positions in: EFU, EFZ, EUM, EEV, GLD, SLV, 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.

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.

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