MARKET COMMENT
November 30, 2006
“I know what you’re thinkin’ punk! Should I hold those shorts
or not? Go ahead, make my day!”
Just when shorting opportunities seem ripe, Mr. Market and
his program trading pals take major indexes back higher. But, wait!
Markets closed basically flat so short-sellers’ dreams may live for
another day.
There was plenty of two-way action with bears taking charge
early, but wouldn’t you know it, just as volume started drying-up “Robo-Trader” appeared throwing some massive buy orders to
squeeze some shorts. Yesterday we
mentioned end-of-month “window dressing” was likely since May have featured
this action. The headline at MarketWatch:
“NASDAQ CLOSES NOVEMBER WITH 2.7% GAIN; DOW AND S&P RISE
1.2 AND 1.6%”.
Like I’ve said all week, “patience will be required
throughout the week.” And, let me add
tomorrow starts a new month but is also the end of the week. We may see some troubles as the month begins
since the action into the close of trading was deceiving and weak.
The big story continues to be the dollar, precious metals
and energy.
Elsewhere in US markets, the focus remains on interest rate
sensitive sectors.
Okay then, a brief look at more volatile and higher beta markets
looks like this.
Well, they were able to rescue stocks late in the trading
day after another data driven “smackdown”. But, don’t mess with
shorting has been the rule of thumb with the world awash in liquidity and
momentum strong. Dirty Harry will get ya!
The
standout issues that send a chill down my spine are the action in the
dollar, precious metals and energy. At the same time, dormant Middle
East issues may be coming to a head with the disclosure today of
Iranian arms and Hezbollah trained fighters in Iraq. If correct, this
is an act of war against US troops and the Commander in Chief is
obliged to defend them. There’s no other way to interpret it. Is that
the message, intensification of war risk, from the weak dollar, rising
precious metals and energy? It has been in the past.
Tomorrow Bernanke is speaking with
more soothing language and we start a new trading month.
I have a bad feeling about it.
Disclaimer: Among
other securities, The ETF Digest maintains positions in: SPY, FXE, FXF, FXB,
GLD, SLV, GDX, CEF, IEF, XLU, DVY, PBW, EWZ, ILF, IEV, HHH, IFN, BSE INDEX,
TRF, EWM, FXI and EWA.