>> But your interest rate cut scenario does not ring true with me. Rates went up a half dozen times before the stock market stop rising. And now they will be cut many
times before this market turns meaningfully back up <<
I disagree. Look at the rally we had with the Fed only *hinting* of a rate cut a month ago. 280 points on the Nasdaq. Prices are cheaper now, expectations are lower, there is even more negativity, more shorts betting against this market, and more cash has built up on the sidelines.
Yes, if Grinchspan waits until Jan 30th and only cuts 1/4 point I think I will be hurting, but if he cuts this week you can't tell me we are going to get some kind of 100 point pop on the Nasdaq. You will see stocks like SUNW, INTC, ORCL, YHOO, etc up 5-6 points in one day and the Nasdaq up a few hundred points. It will of course start with short covering and then foolish shorts will get greedy and think they can short the 2 day rally like they have so many times in the past 4 months. Then you will probably see a continuation of the rally the next day. When the all too common pullback is very short or doesn't last shorts will think to themselves, hmm, something is different this time, it's not falling anymore. Then you will see some panic covering coupled with some real technical buyers and we will see quite a pop. I believe you will see the market up 4 days in a row in the next few weeks. I also believe the Fed will get into gear by the end of this week. |
