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Strategies & Market Trends : Technical analysis for shorts & longs

SPY 690.64

+1.9%

Feb 6 4:00 PM EST

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To: CharlieChina who wrote (40917)	4/5/2004 3:22:23 AM
From: Johnny Canuck	Read Replies (1) of 70561

The Fed has always tried to be neutral during an election year. It can't be seen as favour one party over the other. I am not sure you will get the kind of devaluation you are suggesting before the election. As for the de-valuation of the dollar, I think that was a conscious decision 18 month or so ago when they started dropping interest rates and at the same time hinting the that the Fed was alright with a lower dollar. That kind of policy needs time to work through the system. Any recent changes or changes now won't help Bush's re-election campaign. From the practical side it makes sense given that no country has a stomach for the stagflation of the 80's. Most of the people in power now lived through that and know the average citizen won't stand for the government simply printing more money. I agree they have effective tried the other extreme to get the economy growing. They have lowered interest rates to unseen levels in most peoples life time. or at least the baby boomers. As a result thay have created an extreme amount of liquidity, that the average consumer has used to cushion the economy. The only problem is record debt tied with rising interest rates creates a big issue if the level of employment seen in the 90's does not return, I don't see the happening, as they will be unable to service the debt if rates rise more than 2 0r 3 points. Reals estate wealth has taken the place of stock market wealth and we all know that real estate is cyclical also. If you assume a 7 year cycle and that real estate started to take off in about 2000/2001, just after the stock market bust and the lowering of interest rated, we should see a peak in 2005. This corresponds to the post election year which is typically down. I agree with the ranges posted for the DOW on the chart link you put up. Any idea how the time element of the end of the summer for the peak was arrived at?

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