MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 683.70

-0.3%

Dec 8 4:00 PM EST

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To: Doug who wrote (73153)	3/23/2001 11:00:54 PM
From: gfs_1999	Read Replies (1) of 99985

Doug, How does interest rates tie up with those stages.? Interest rates down - Bonds prices up = good for stocks because bonds and stock market in a normal situation trend together. When Commodites prices are trending up => Interest rates are also trending up due inflation concern so Bonds prices will trade down and stock will follow. Just stocks at commodities sector will work. Paper,Oil...... We already saw it ! So Alan Greenspan increased interest rate due Stock Market Irrational Exuberance and Oil price. IMO more due Irrational Exub. When stock market start to crash due increase at Interest rate investor become more defensive so they start to buy stocks at Food,Staples and Tabacco just look at NYSE:MO or stay in cash. We already saw that! So when Interest rate reach a peak and FED start to ease investors start to leave defensive stocks and go to sectors where they believe are sensitive to interest rate ease. Bank,Retail.......and Bonds IMO we already saw it during first and second Fed ease So when investor realize that Fed will ease more after 3th ease they become more positive about growth expectation so they buy Stocks . Tech sector will outpeform others sector but Financial and retail will work too. So will be very important that FED ease works and Tech companies earnings grow start to rebound. IMO the next rally will be great for Tech but as soon investor realize that Interest rate at 5%-4% is not working stock market could crash hard and investors will start to compare US and Japan more close. May be investor will return to defensive stocks or commodities stage Regards GFS

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