Tech, Commodities and Emerging Markets Strong

That's sort of the way I see the buying-tentative. No one seems to be throwing everything they've got at markets. Days like today have been common. Investors start strongly but then take a few steps back. The strength in some sectors is impressive especially tech, commodity and emerging markets. Away from those areas, bulls are putting one baby step in front of the other.

Volume is picking up and that's encouraging and the Treasury auction attracted buyers "at a price". As to the latter there's plenty more where that came from.

Breadth was positive if not spectacularly so.

From Decision Point is the McClellan Summation Index and the reading remains much over 1000 which is much overbought. But it can stay that way longer than you expect.

Let's face it, the bulls are still in control but their fervor seems tentative since their follow-through seems weak. Now that I've said that they'll probably put a big move on. Next week seems more important given quad witching where all kinds of things can happen. Bulls will try to paint the tape as much as possible to put on good performance numbers for the six month period of 2009. There are fees and bonuses at stake.

The world is changing and it seems old market relationships are reversing. Many have dared over the past few years to suggest a decoupling will take place from mature markets (US, Europe and Japan) to high growth markets (BRICs and others). Just as confidence this is occurring it goes back to normal. One of these days it will stick because mature markets have problems. These include the large size of these economies, labor costs, government controls and demographics where the population is aging. On the other hand, Emerging Markets enjoy a vibrant economic growth, a youthful population and friendly government policies. Eventually all this will stick. Investors need to rethink their allocations.

That's it for me this week. We're in New Hampshire looking at properties. I have the old computer with me but the good news is the new one seems to be ready to kick it pretty good. This success was despite poor guidance and direction from three Lenovo support reps who didn't know up from down. The combination of our savvy son and experienced programmer resolved all the issues.

Have a great weekend!

Disclaimer: Among other issues the ETF Digest maintains positions in: IEF, TLT, TBT, UDN, DBV, GLD, DBC, DBA, EFA, EEM, EWZ and FXI.


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.