"Lots of yacking that as soon as we get a rate cut we will see a rally. I won't count on much of one. The market is a discounting machine. That means it probably has some rate cuts priced in..."
There ya go. Most sensible thing I've read all day.
Here's some MORE yacking that's going around:
"All that money on the sidelines, just waiting to come in!"
"Can't short at these oversold levels with all that money on the sidelines waiting to come in."
"Tax-loss selling will finish soon, then look for 'January Effect' to kick in."
A month ago, it was "The Election" that was hanging things up, and just wait until the election resolves, then we rally. Looked to me like the market had THAT one figured out, too.
Since the end of the summer bounce (September 1), every rally has been sold by major players trying to lighten their tech holdings, seems to me. It also seems to me that we won't see a persistent rally until all of Greenspan's anti-inflationary rate hikes finish working their way through the economy. My understanding is that the rate adjustments take 9-15 months to work through the system. The final adjustment in Greenspan's latest series was what -- 50 basis points in July? So, the absolute earliest we will see that ripple will be March, and we might not see it until September. Furthermore, I would guess the bottom will come later rather than sooner, since the market will probably wait for some confirmation that the effects Greenspan's cool-down efforts have finished cycling through the system, just as it waited for earnings disappointments to start trickling in this summer to confirm that the effects of the cool-down had begun to cycle through.
To put it more explicitly: All those consecutive rate hikes were intended to cool the economy, and when the market saw confirmation that it was working (in the form of earnings disappointments), then the real selling started. Now, the cessation of rate hikes is intended to land the economy as softly as possible. When the market sees confirmation that we have landed -- when the earnings disappointments start drying up -- then the real buying might start.
(Just my 2-cents. Your 2-cents may go farther.. :-)
ig |
