Another brutal day on Wall Street. The Nasdaq
dumped and tried to put on a weak bounce off of 2750 -
the lows last week - and failed. It closed and made a new
annual low. Seminconductors and Interduds got shot
out of the sky and biotechs crumbled. Cruelty ruled.
Not a day for the week of heart or holders of tech
stocks.
This is brutal, but people aren't scared. Investment
sentiment surveys continue to show that people are 66%
bullish. The VIX market volatility index still shows that
people aren't buying premiums for put options, showing
that people are remaining fearless. Who are these nuts?
What is going on?
The party is over. It has been over. Today Merrill
Lynch postponed an Internet conference that had
originally been scheduled for December. It was going to
include presentations by e-commerce , B2B, and
wireless companies. Its now being delayed until the
springtime. Susan McCabe, a Merrill Lynch
spokesman, said that the problem is right now internets
are "a defensive story, and in the spring it will be more
of an offensive story." Chase H&Q also canceled its
annual Internet stock conference. Who would want to
go if they held them?
The Nasdaq made a new low today. The Consumer
Confidence index came out today and dipped to 135.5 in
November, the lowest since October of 1999. Durable
goods orders fell 5.5% last month when the economists
forecasted a decline of 1.3%. Tomorrow we will get a
revised GDP number for the third quarter, which if I'm
right will have to be revised down. We still have no
President. Corporate earning estimates are continually
being revised down by analysts. The economy is slowing
down. And the Federal Reserve Board is not going to
cut interest rates anytime soon just to stop people's
stock market losses. Don't believe me? Listen to this.
Two of the Fed governors, and one future member,
spoke today and said this:
"Chicago Fed's Moskow says risk of heightened
inflation remains Chicago--Nov. 28--Although the
economic environment "seems to be in much
better balance" than it was in May, the "risk of
heightened inflation pressures still dominates," Chicago
Federal Reserve President Michael Moskow said in the
text of a speech at an economic forum in Madison, Wis.
He said that although available data since then had
pointed to a moderation in demand growth from the
"frenetic pace" in late 1999 and early 2000, continued
tight labor markets and higher energy prices had the
potential to raise inflation expectations. But he
cited "little evidence" energy price rises had spilled over
into core inflation."
"Speaking in Portland, Ore., San Francisco Fed
President Robert Parry also said that while there was
growing evidence of a U.S. slowdown, it was ``too soon
to know for sure if we've really got the inflation risks
under control.''
``While tighter financial conditions give us reason to
think the slowdown is likely to continue, we'll have to
wait and see,'' he added."
"St. Louis Fed President William Poole, a voting FOMC
member next year, told an audience in London the Fed
needed to act preemptively to fight inflation and should
monitor underlying factors such as money supply
growth that could cause price pressures to flare up.
Speaking to reporters after delivering his speech, Poole
added the long-run risks for U.S. inflation were on the
upside. ''The bigger risk we face is that inflation is more
likely to rise than fall'' over the next three to 10 years,
he said."
When these guys speak they still talk about inflation.
They don't say they are worried about a possible
recession or economic slowdown. Inflation is still their
bogeyman. If they were going to cut rates soon or
change the bias then the Fed guys wouldn't be running
around harping about inflation fears. The truth is they
would rather see a recession and people lose their jobs
then to see an ounce of inflation creep into the economy.
People think Greenspan and these men are out to
protect them. They are out to protect the value of
money and the banking community. The real economy
and your wallet is only a secondary consideration.
The NEWS is BAD FOLKS. But everyone is still
bullish. We can't get a real bottom until the
Ameritraders and the bull market knuckleheads throw
in the towel.
But people don't want to face how bad things are.
Instead they want to believe that the "New Economy" is
more than just a slogan. It's easy to believe we can get a
big bounce, because it has happened so many times
before. Even yesterday I said I hoped the Naz would
bounce off the low the other week. But it didn't. Even
today, at one point I was prepared to cover the short
positions I opened yesterday. I will cover if it appears
that the Nasdaq is trying to put in another bear market
bounce. If both stochastic lines cross over above 20 on
the 60 minute line chart I'll probably cover. Or if the
MACD lines put on a buy signal, or if the Nasdaq
breaks the downtrendline that I've covered. Those are
the type of things that I'm looking for to indicate that
another Stuart rally is coming. Only the Ameritraders
are buying. We need a complete washout to get a real
bottom. It will happen and it will be frightening. People
will think the sky is falling. |
