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Earnings news from Intel (INTC) stopped bulls in their tracks as did continuing pessimism from the eurozone where credibility is challenged. Intel's warning continued a string of warnings from a variety of companies who see soft times ahead. I'd like to be more bullish, but there isn't much to be enthusiastic about. Sure, the Fed will meet Tuesday and may unleash QE3, or a variation of it, which will flood markets with liquidity. This will buy time and that's about it since the troubles facing the U.S. and Europe have no quick fix.

Retail investors continue to exit markets as noted by Deutsche Bank as follows: "Investors fled from equities (November) with outflows of $6.8bn from long-only ETPs; while pouring $4.9bn and $3.1bn into fixed income."  

And while you might be quick to label me a Debbie Downer, there is no escaping the realities of our situation. The politics over the next 12 months will be poisonous, petty and cynical. Not much will get done beyond some temporary money printing which comes with its own negatives.

Financial and materials sectors led the way lower Monday. Declines in these sectors represent the tell the future won't be rosy.

Gold prices fell sharply as the dollar rallied and the euro fell. Commodity prices overall were weak while bonds rallied as markets continued their schizophrenic behavior.

Volume was modest overall which may be only somewhat encouraging. Breadth per the WSJ was quite negative.

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Continue to U.S. Sector, Stocks & Bond ETFs

Continue to Currency & Commodity Market ETFs

Continue to Overseas Sectors & ETFs

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

Tuesday will deliver Retail Sales and Business Inventory reports. The big deal will be the FOMC announcement at 2:15PM. Can the beard save Christmas if nothing else? 

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: SSO, DIG, FAS, UYM, VT, MGV, BND, BSV, VGT, VWO, VNO, IAU, DJCI, DJP, VMBS, VIG, ILF, EWA, IEV, EWC, EWJ, EWG, EWU, EWD, 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.