The following commentary comes from an independent investor or market observer as part of TheStreet’s guest contributor program, which is separate from the company’s news coverage.
By David Gillie for ETF Digest NEW YORK (ETF Digest ) — Street Smart Investors: sometimes it can be hard to tell what moves the market. Fundamentals? Technicals? News Headlines? The Fed? Algorithms? Maybe all of these to different degrees on different days. I can’t really tell you with certainty. at one time I was an avid photographer (before digital photography had ever been heard of). most of the time in photography is spent in the darkroom. The camera produces a negative on the film. you never know what the print is going to look like until after it’s developed. Therefore, one needed to learn how to read a negative. It’s the exact inverse… light is dark; dark is light. so it goes with the market. sometimes it helps to read the negative (or the inverse). there is nearly a direct inverse correlation between the US Dollar and the S&P 500. US Dollar Index S&P 500 while the S&P looks choppy and undefined through August and September, the US Dollar index is clearly defined in September. Also note that the Dollar has been making higher lows since may – a bullish indicator for the Dollar (bearish for equities and commodities). Gold has been crushed in September dropping $250 from it’s $1900 highs. again, I can’t say with certainty, which is moving which, but with the surge in the Dollar (and presumably continuing) it would seem very difficult for equities to rise against it. I’ve been bearish on the market since early may. by mid-June it had completely fallen apart. High frequency algorithm programs have been able to yank the market around in short intervals, but even those powerful programs can’t reverse the overall trend. although we saw hard selling this week, I believe there is still more downside in this market – likely down to the 1050ish level. Furthermore, global economies lack any substantial upside catalyst and the US Government is functioning with all the effectiveness of the Keystone Cops. Certainly there will be day trading popping the market up on oversold conditions, but they will be short-lived and met with selling as long as uncertainty clouds the air. The Fed’s recent announcement of “Operation Twist” – selling short term Treasuries and buying long term Treasuries – will actually hurt the Banking Sector and adds nothing to equities overall. unless there is a real fundamental change in Europe (not just a rumor or headline) or unless the Fed launches hundreds of Billions of QE3, STAY IN CASH. This would be great time to go watch the leaves change. if you feel you must be in the market, the only things I like now are the mega dividend positions I recommended in “The Classical Portfolio” and the Inverse S&P (SDS) and Inverse Financials (SKF). Drop me a note if you have any questions. all the best! David Follow the author on Twitter. Comments are welcome at .>To order reprints of this article, click here: Reprints