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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Zeev Hed who wrote (50647)4/12/2002 10:55:47 AM
From: Steve Lee  Read Replies (1) of 99280
 
Is your possibility of a three/five week rally to the 1900 area based mainly on the charts? Or are there additional contributing turnips as well?

I know that bullish factors you have considered recently are:

1) The illusion of a recovery before a double dip becomes apparent
2) The fed pump
3) April fund inflows

On point 1) I believe that the second dip is already with us and that has already become apparent even to a fair number of private individuals. The dawn of realisation of the masses is yet to come but not far off.

I can only make guesses on the second two points as I am not a qualified economist but it seems to me (we had this discussion before) that the effect of the stock market decline is outweighing any fed pump on the consumers' pockets. The bear market has not only reduced spending power but has reduced individual net worth and corporate balance sheets. In effect the money supply has gone down severely, if not by any generally accepted measure. The fed pump not only doesn't match the decline due to bear market, but also fails to address the net worth issue. In fact, it makes it worse as it brings an easy road to the burden of additional debt.

And for April inflows - shouldn't we have seen the effect already? Also as we have this week hit new lows for the year on the Nasdaq, then I expect redemptions due to margin calls and general nervousness. Might also be true that with economic weakness, people will make redemptions in order to pay the bills and loan repayments.
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