Is the market going to swoon in the next 2 months? Contrarian view from the EMC thread..........stan
To: JDN (7285 )
From: john rosser Friday, Jul 30 1999 4:38PM ET
Reply # of 7286
*OT* We'll see...but I think a lot of "cautious" money has already moved to the sidelines (so it will have to come back in, at some point)...everyone knows that August/September is a seasonally weak period for the market...in fact, so many people know, I think we may have already seen its effect (sell-off)..similar to January effect moving into Dec./Nov...earnings boffo, Y2K much smaller problem than anticipated (apparently), long bond at 6.12 (I think that is certainly much closer to its high for the year, then the low...)...we are already seeing some evidence of slowing of U.S. economy (2.3% GDP, consumer confidence numbers)..Greenspan will see this, average the ECI numbers (2 month average, .75, hohum), and not do anything...he won't do anything because (1) it is not conclusive that inflation is growing anywhere above 2% (max 2.25%)..he has enough data to hold off the hawks on the comittee and (2) to raise rates (again) going into Y2K is the last thing he wants to do...economic recoveries in many countries fragile...I think his preferance will be to wait until after January 1, 2000, if at all possible..
Watch "safety haven" capital flow into the U.S. leading to Y2K, reducing the bond yield (along with a friendly Fed) to 5.5%
This will help big cap, growth stocks like EMC...
Sometime in August, it will become clear to the markets that inflation is not a problem...when it does, I think we will somewhat of a rally...if for some reason we don't, I agree, we will see one beginning in October...but I don't see a lot of downside for EMC here...if, for any reason, it would drop to mid-50's, I would average down...
EMC at mid-50's...hmm, company growing EPS at 50%+ selling at >60 PE...wow...
At any rate, the Dow is down over 300 pts. in a couple days, and the Naz is down (collectively) 67 pts. in a couple days....I feel real good about my entry point...only down 1/4 so far...heavy down open on Monday would bring out buyers for sure...
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