MARKET INDEX TECHNICAL ANALYSIS - MITA Message Board

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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: J.T. who wrote (18507)	2/15/2004 6:11:29 PM
From: Ken Reidy	Read Replies (2) of 19219

Secular Bull??....perhaps you should consider another explanation for the stock market rally...it has been entirely currency driven. The Secular Bull you are referring to is nothing but a currency mirage...the Dow has gone nowhere over the last 18 months in terms of the Euro or Yen. Economic statistics reveal no recovery...especially when one looks at the most important economic statistic...employment. The only reason the stock market has done well the last 18 months is due to dollar weakness. If the dollar continues to weaken...the stock market will do fine until people realize the damage a weak currency will have on our economy...that it will lead to inflation and higher interest rates...then there will be a rush into commodities and the stock market will sell off hard. I could be wrong...but one should at least consider this as a possibility. I give you Friday as the most recent example of what I am talking about. The stock markets gap up on disappointing trade deficit news because it is viewed as dollar negative. At 9:45...a second dose of negative news hits....very disappointing consumer confidence. Perception....dollar negative....so stock market surges up for 15 minutes. At 10:00...massive currency intervention occurs to strengthen dollar....result...stock market sell off because dollar strengthens. One needs to consider what is going on here...many of the rules have changed...we have central bankers panicking and spending billions of dollars to weaken their own currencies. I feel their desperation and I think it is prudent to be cautious regarding the so called secular bull market. I think the stock market might do fine as the dollar falls to 80...but when 80 eventually fails to hold and it starts heading to 60 and maybe lower...investors will start to figure out that a weaker dollar is not a good thing.

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