HI GZ,
Mike Marzano, of Greenwich Natwest Futures has mentioned
that he believes the Fed has never moved in the meeting
after it has done a 50 basis point raise in rates.
I agree that we have some upside in front of us. Stocks
such as QCOM, JDSU, SUNW, CSCO, seem to have identified some
low levels that should yield some rallies.
a few comments from yesterday's Barron's:
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The Granville Market Letter
P.O. Drawer 413006, Kansas City, Mo. 64141
May 18 ~ Webster defines a paradox as ''a tenet contrary to received opinion; also, an assertion or sentiment seemingly contradictory, or opposed to common sense, but that yet may be true in fact.''. . . The paradox is simply this: Currently there are two schools of thought regarding the current A/D [advance/decline] line. One is dead right and the other is dead wrong. On the one hand, we have some bears who contend that the A/D line in its current position will end up dragging down all the major indexes with it. On the other hand, some bulls contend that the A/D line has bottomed and is about to rise and eventually recover. While the bears think that that is opposed to common sense, it may yet be true in fact. The bulls have history on their side.
As bad as the A/D line looked at the end of 1994, it was followed by a full recovery rather than the fall I had expected at that time. . . .The current chart of the advance/decline line. . .looks very much like that 1994 chart. I am not going to make the same mistake twice. Not only are the two charts almost identical, but we also have a very interesting parallel with what the Federal Reserve was doing. In 1994 and 1995 the Fed raised rates seven times but the stock market had already turned up before it was through tightening. . . . The Dow bottomed in December 1994 under 4000 while the Fed continued to raise rates. It wasn't until July 1995 that rates were lowered.
-JOSEPH E. GRANVILLE
The McClellan Market Report
P.O. Box 39779, Lakewood, Wash. 98439
May 18 ~ One thing that makes us feel really good about the prospects for an advance this summer is how few of our fellow analysts believe that one is likely. There are also many wonderful reasons to be bearish right now and we keep hearing phrases in the financial media like ''trading range'' and ''one more bottom.''
These serve to reinforce our bullish outlook. It is important to remember that there are always reasons to be bearish. Always. And yet the market has been able to climb various walls of worry over the years.
-TOM MCCLELLAN |
