The "bias" comment by Greenspan on Friday is very interesting. He knew that it would have an uplifting effect on equity markets (and bond markets for that matter). I agree that we likely will see an upday tomorrow in NY and elsewhere. We could end this week above 8,000 but, if that happens I'll fight the personal perception that we are off to the races again for the short term.
To be clear, I do not think the bull is dead, not with rates low and the Fed indicating they may go lower. At the same time, there has been no fundamental change in any of the events that set off the plunge to intraday low of 7380 on 8/31. Though I don't think we will retest 7380, I do think that a run up to 8,000 could be followed by a pull back to 7500-7700 range subsequently. Volatility has been heightened and will remain heightened for awhile.
As for TBR, sentiment will resist a change to the positive in my opinion until the GOB attacks the fiscal deficit. That cannot happen until sometime after 10/4 at the earliest. In the meantime, many people, myself included, believe that if there is a strong rally on Wall Street, the quickest, largest gains will come from some of the beaten down US issues. Better to buy them first, ride them up, then if you are a TBR bull, switch into what is expected to be a lagging TBR. I think that is the view that will prevail. Fundamentals will not drive TBR share price until budget reform takes place.
That said, we could very well see a rally in TBR to the low 70's over the next few days based on the hint of the rate cut and strong rallies in NY, Asia, and Europe. Negative sentiment aside, it has to be very oversold at 55-60.
I'm going to trade accordingly. |
