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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	4/20/2004 4:39:09 AM
From: Taikun	Read Replies (1) of 74559

I am trying to figure out if we're going to have a summer rally (I think so) and when it will end and so the quagmire can begin. With Blair unlikely to get reelected in the projected October UK election, Howard in Australia's November election possibly being replaced, Martin in Canada looking wobbly for March and the US election looming, what will the terror index be like in October and November (higher than current I think) and what impact will that have? Will Al Qaeda's threats of a swing event a la Madrid happen? Will it just be a few months of chatter-induced fear? What will happen to the markets? The markets do not seem to be responding well to the 1% Fed Funds rate and in peacetime this would have driven stronger performance in the stock market. It appears as if Greenspan is afraid to raise rates even to 1.05% (remember the Fed's discussion on possibly using increments smaller than 0.25%). To have a weapon and not use it weakens the power of the weapon in my opinion. Is Greenspan in fear of the monster he has created? What else does he know/fear? The liquidity excess has not blown off yet. Then I look at the ^VIX, down around 14-16, and it is lower than the average ^VIX of 21.98 through 2003. The only time it has crested 20 in 2004 was a few times in the couple of weeks after Madrid's 3/11. This is clearly investor complacency. So are investors: 1. complacent because they expect one more leg to this bear rally, or was 2003 (ie Iraq) so much different that we don't need Puts? Reality check, please? With the US deficit, the decreasing dollar, Iraq, Al Qaeda, the aforementioned elections I'm worried, but there was a CNN interview with Joe 6-pack yesterday telling the reporter that Iraq, Al Qaeda doesn't affect him or his business - he's bullish and spending. So either Greenspan knows something we don't or Joe 6-pack is naieve. I personally think we'll be in this feared Wall Street quagmire by November. Can they both be right?

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