Technology Stocks & Market Talk With Don Wolanchuk Message Board

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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk

SOXL 54.01

+9.7%

Jan 6 4:00 PM EST

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To: da_cheif™ who wrote (2510)	5/8/2002 9:26:16 AM
From: Chip McVickar	of 207664

There's a lot of old horizontal support here at 9800 on the DJIA. Good place as any to try a run higher and keep the mutual fund buyers in the game. Hahn is worth some chuckles he's got one mantra for the last year. So he's been levitated to a God. Here's a sample: "....Do you want to hear the list of potential events which could cause a stock market capitulation? Probably not, but here it is. Ariel Sharon travels to Washington, D.C. to meet with President Bush on Tuesday. The risk of a terrorism event goes sky high during this time. The US dollar collapsed below key support last week, threatening to disrupt the international flow of funds and ignite US inflation. Greenspan and the FOMC have very few monetary policy tools available to help the stock market. As a matter of fact, the FOMC may have to act to stabilize the currency and dampen inflationary expectations. Whether it's a bias statement change or an interest rate hike, the FOMC decision on interest rates will not be a market friendly event. The Fed has been shrinking the money supply in recent weeks. Only a new terrorism event would cause them to revert to their hyperinflationary money growth policy. CSCO reports earnings on Tuesday night. Expectations for a good earnings report and bullish forward guidance are high. Based on the drought in IT spending, CSCO's report may trigger the final capitulation in Nasdaq. Margin debt is at the highest level in 2002. Without a doubt, the money in weak hands will be moved to strong hands as forced liquidation clobbers the stock market. Mutual fund redemptions are going to be a very negative factor for the stock market. The long awaited run on the mutual funds will make the run on the banks in the 1930's pale by comparison." "[Repeated from Thursday's comments] Just to review the importance of the relative strength of the US Dollar, please remember it holds the key to the stock market. The flow of international funds is of paramount importance. The US has a huge trade deficit. We import many goods from overseas at cheap prices, including crude oil. This holds down inflation in the US. Over the past decade, the payments for imported goods have found their way back to the US as investments in our equity and fixed income markets. Mostly, the US has had a bull market and provided safe haven in a dangerous world. That may be ending soon. If the US dollar falls by 30% to a more normal historical relationship with other currencies, the international flow of funds will be disrupted (and possibly reversed). Also, the lid on inflation will be lifted. Our equity and fixed income markets will lose an important source of funds. This is the single largest bearish consideration."

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