MARKET COMMENT
March 6, 2007
Markets were severely oversold coming into today and a rally
was likely.
Have we seen the bottom then?
It’s really hard to say since the news hasn’t changed
much.
In fact, much of the economic news
today was lousy ranging from declining factory orders,
poor productivity and employment costs and Bernanke comments that portfolios held by Fannie Mae and
Freddie Mac “continue to represent a potentially significant source of systemic
risk”
These negative news items were
brushed aside in a buying panic.
I commented over the weekend that declines such as we’re now
seeing, including the major sell-off in April 2000, were followed by major
rallies higher that while dynamic didn’t last.
Further, there’s still a lot of liquidity in the system and unlike
during the decline in 2000, authorities aren’t tightening--they’re still in a money
printing mode.
The McClellan Oscillator also neared minus 100 which also
reflect much oversold conditions.
Let’s just view a few more charts today and then take a
break since the week still holds plenty of news including the Fed Beige Book
tomorrow and Friday’s all important employment data.
After over a week of sharp losses the equity markets were
much oversold and a countertrend rally was clearly in the cards.
It occurred because markets that caused all
the trouble to begin with [in Asia particularly]
rallied.
Furthermore, the crummy
economic news of the day was completely ignored.
This is what happens when markets get
oversold and momentum builds directionally.
And, for those thinking of shorting, remember one thing:
there’s a bullish empire and army loaded with plenty of cash arrayed against
you.
May the force be with you.
Have a pleasant evening.
Disclaimer:
Among
other issues, the ETF Digest maintains positions in: GLD, DBC, DBE, IEF, EEM
and EWJ.