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Wednesday, September 2, 2009

Death To ETFs

It was starting to look like we might get a little bounce today, but the computers apparently got the "sell" signal, and we sold off into the close. Volume was less than yesterday, the only thing stopping another distribution day, but that isn't very comforting. RSI is showing a big divergence and is weakening pretty rapidly. MACD tried to whipsaw us a few days ago, but resumed it's downtrend. Hello, 50dma.

The Nasdaq is almost there. Again, lower volume than yesterday, which isn't saying much.

The Russell 2000 is also approaching the lower end of the range. Breaking the prior low will have a psychological effect, but the 50dma may get past there by the time we get there. At any rate, a bounce of the 50 will be incredibly bullish, and if it comes on high volume after Labor Day, it will be incredibly bullish. The market is setting up for something, but we just don't know what yet.

ETF's have been in the news lately. This is UNG, natural gas, which is not a leveraged ETF but is still dropping fast. There really isn't much technical analysis to do here, it is in a steady down trend and there is no support above 0.

There is no point at all on doing TA on DXO, which is being shut down by Deutsche Bank. The CFTC is looking at the role of ETFs in driving up commodity prices, especially the leveraged ones, and it is jjust a matter of time before these are in the crosshairs. Both DXO and UNG ceased issuing new shares earlier this summer, turning them into closed end funds which no longer track the commodities they are supposed to, so there really is no point in trading them anymore. I suspect it won't be long before all the index ETFs, especially the leveraged ones, are done away with. Another way of forcing the little guy to buy crap stocks.

Again, Wednesday, little time, etc. I will have the new highs update in about 3 hours or so.

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