This morning appears to be shaping up as a great day to buy
equities.
we saw a 27 to 4 up to down ratio, this morning, a surge
in volume, a huge give up in prices almost across the board.
The VIX, vaulted up to 47.70, while the VXN moved well into
the 80's and I have a high (that may be wrong) of 99.32.I
have argued that we would not bottom In August with a VIX
down in the 28 area and that a spike into the 40's was much
more likely. ditto the VXN, a bottom in stock prices with
the VXN down in the 40's or 50's also did not seem to make
sense.
The FED was very aggressive in lowering rates 50 basis
points prior to the start of trading today, which further
helps the monetary situation, in truth, they are just
catching up with the huge rally in the credit markets last
week, the short end of the curve moved dramatically last
week, with the Eurodollar contract, Fed Funds, Bill and 2
year notes, really spiking to some massive highs in price.
We may be able to look back at the interest rate moves of
last thurday and Friday and find that it's analogous to
Oct 5th of 1998, when we had a huge spike high in prices in
the TBond, and Note during the LTCM crisis, which was in
full bloom.
We have often seen flights to quality in the credit markets
that give us blown off tops in price in bonds, notes and
the short end eurodollars and bill rates, and this occurs
just before equities bottom in price. The flight to
quality move seems to be stalling out today and could be
indicating that investors are getting ready to assume
more risk by buying stocks.
We also may be making a low today, just in time for the
old Buy Rosh Hasanna sell Yom Kippur Maxim of Wall Street.
Rosh Hasanna should be starting at sunset tonight.
Obviously the market has been trending lower and we do have
much greater uncertainty with the impending military action,
but none the less, we should be shaping up for what could
be a very excellent intermediate bottom in the Stock Market.
Since the Market was closed for 4 days last week, It may
take a few days this week to completely wash out the
sellers. I think it's probably already happened today,
but time will tell.
John |
