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Market Meter (The U.S. Equity Markets at a Glance) |
Short-term (1-10 days)
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This rally seems to be in its final stages. However, based on its track record, we may see one more bout of irrational buying. Keep in mind that the long-term downside risk for stocks far outweighs the limited upside potential.
Snapshot: Marginally higher highs are likely but the market may roll over at any time.
Expanded: The major indexes have been flat for the past month while many other sectors and indexes have actually declined. The 50% Fibonacci resistance levels at S&P 1,125, and trend line channel resistance slightly above that level, (see chart on top of page 4) should be enough to repel the major indexes and send stocks lower. |
Mid-term (1-8 weeks)
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Snapshot: We are awaiting the beginning stages of a powerful and sharp decline.
Expanded: The last post October 19th decline did not decisively break below S&P 1,040 and proved to be a decoy decline. The next leg down, if legit, should break below S&P 1,040 and thus confirm an end of the rally, and the beginning of a decline that should draw the S&P below 950 before we see another corrective push lasting more than a week or two. |
Long-term
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The long-term outlook remains extremely bearish. The Dow is likely to approach 5,000 before the end of 2010-11. The target for the ultimate market bottom is 3,000 and below within the next 2-4 years. For more details refer to the following articles "The Four Horsemen..."
(November issue, page 6) and "Dow 2,000, Why? (June issue, page 5). | |
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Table of Contents |
ETF Profit Strategies - p. 2 - 7
Dissecting the Prospects of A Jobless Recovery - p. 8 - 11
4 Investment Mega Themes - p. 12 -13
New ETF Launches - p. 13
Performance Corner - p. 14 |
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About new ETFs
September saw the launch of 12 new ETFs, none of which was short or leveraged. The last time 12 or more non-leveraged non-short ETFs hit the market was in January 2009. Ironically, January 2009 was also the last time that investors felt as good about the market as they do today.
Among the newcomers is an inflation hedged ETF (CPI), Claymore's China All-Cap ETF (YAO), commodity ETFs (CRBA and CRBI) and an Oklahoma ETF (OOK). The last time Claymore launched a China ETFs (Tao in December 2007 and HAO in January 2008), the Chinese market tanked right thereafter. Incidentally, the last time that batches of commodity ETFs hit the market was in Q1/Q2 2008, just before, or at the beginning stages of the commodity meltdown. Some ETF providers have built a track record of launching ETFs at the worst of times. Introducing China and commodity ETFs is another display of the optimism we predicted would mark the final stages of this rally.
The mere fact that we now have a IQ CPI Inflation Hedged ETF (CPI) confirms our outlook for a deflationary period ahead. A complete list of new ETF launches is included on page 13. |
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