Hurricanes are rolling thru the Atlantic and Gulf like so many errant bowling balls. Energy prices attempted some stabilization today as demand destruction takes precedence over storms for now.

The on/off fire sale of Lehman Bros. has generated enough rumors to get the animal spirits flowing for the “buy financials” crowd. Thus far all financial firm failures [at least for the big boys] have been met by rescues or arranged marriages. Bulls feel they have a “put” in place to insure their long positions.

The Fed’s Beige Book reported more gloomy economic data from their 12 districts. While headlines chirped price pressures were easing they actually weren’t.

Manufacturing took it on the chin as auto sales were dreadful and historically so.

Bulls feel current data restricts the Fed from raising interest rates even though rates are historically low. The sense is raising rates would be a psychological negative for consumers. That’s arguable frankly. But enthusiastic bulls use this as an excuse to buy stocks in consumer sectors and homebuilders.

Volume, though somewhat higher, and breadth don’t do much to justify bullish enthusiasm.

You’d be right to think conditions are screwy. After all selling the hell out of companies that actually produce useful stuff and buying troubled financials makes little sense on the surface. But, bulls are convinced they can buy the latter with impunity since the Fed/Treasury have their backs. It only makes sense with that in mind.

You’re also wondering why I keep posting the same market sectors all the time. That’s a good question. I do it primarily because these are the markets that matter currently in my opinion. I also do it in the interest of time. But, if you have a special request, I’m generally happy to oblige and you may contact via email: dave@etfdigest.com.

Have a pleasant evening.

Disclaimer: Among other issues the ETF Digest maintains long or short positions in: IWM, UWM, QQQQ, QLD, XLP, UGE, XLY, IEF, TLT, UUP, FXE, DRR, GLD, DZZ, DBC, DEE, USO, EFA, EFU, EEM, EEV and FXI.

Last 5 posts by David Fry

• MARKET COMMENT October 22, 2009 DRIVE-THRU SOUP KITCHEN 2009 So, what the hell was yesterday about anyway? - October 22nd, 2009
• MARKET COMMENT October 20, 2009 TAKING A BREAK It was a pretty strange day. - October 20th, 2009
• MARKET COMMENT October 13, 2009 EARNINGS WORRY WARTS I just have a spooky feeling but then I always do. - October 13th, 2009
• MARKET COMMENT October 8, 2009 GETTING SOME ALTITUDE SICKNESS YET? - October 8th, 2009
• MARKET COMMENT October 2, 2009 REALITY BITES BULLS Economic reality is meeting bullish enthusiasm and the results are disappointing and upsetting. - October 2nd, 2009