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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 671.91

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Nov 14 4:00 PM EST

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To: LTK007 who wrote (28180)	10/1/1999 8:32:00 PM
From: pater tenebrarum	Read Replies (1) of 99985

Max, i agree with that and am buying short-dated index calls on sharp downswings myself to hedge against that possibility. however, my own view of the FOMC is that it will probably not be good for the markets NO MATTER what the Fed does, beyond perhaps an initial knee-jerk reaction. the bulls argue that we only have to get it 'out of the way' to move higher again - perhaps. but consider this: if they raise, people may remember the 'three hikes and a tumble' rule and sell on that. if they don't raise, the dollar will have to contend with the fact that the ECB is apparently getting ready to raise (lots of hawkish talk out of there lately) and tumble against the Euro. the bond market isn't going to like it either...in fact, there are quite a few economists out there who argue that the Fed is already behind the curve and the bond market's reaction to the latest NAPM horrors seems to bear that out to some extent. no matter how you look at it, it can't be good for a stock market at record valuations. so if they rally it after the FOMC i'll likely short that rally. i hear that bearish sentiment is too thick...again, maybe that's the case. there IS money on the sidelines. the question is if that money will be drawn back in. the bearish talk continues to be accompanied by a lot of index call buying...and NYSE members have been net sellers for eight weeks in a row, which is rare. apparently they sell right into their upgrades. then there are the big moves the Yen and gold have had...some big players have been burned in those. that's not good for liquidity. now we have all these negatives, and maybe so many negatives are enough to induce the market and do the unexpected and rally to new highs...but it could be that we are seeing the 'continuity of confidence' challenged as someone put it. if it's challenged any more, we're heading down. regards, hb

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