This friday is the most volatile of all Fridays .. tripple witching... usually on such a day ,, wide volatile swing occures as CBOE fights the ticker as not to lose the most one way or other..
Today's sell off was a chain reaction to Europeans picking up the Japan market,, the fact that Nikkei hit all time lows in 12 years ,, a symbolic ,, stock market cycle,, set off a chain reaction ,, Nikkei's decline had no relations to Greenspan's non committal to the rate cuts ,, rather the continuing earnings erosion by Nikkei blue chips and bank's failure...
As for Latin America ,, the water has been spelt ,, and we are now back to early 80s where ,, rampant interest rate of over 70% and daily fluctuating bank rates will have savings holders playing musical chairs once more from one bank to another.. no governments or IMF can bail out the bad debts,, US and other international banks will incure a huge losses ,, Latin America's trading partners will be afraid to give out new loans or facilitate credit for purchase of their own goods.. affecting their production in respective countries.
So all the bad news is out ,,why did Europe fall ?
Europeans are exposed to overseas market more than any one else ,,globally ,, from their colonial days to modern times,, they have a tradition of some 60% to 70% exposure to foreign markets,, within EEC as well as Africa,, Asia and Americas,, any economical downturn in a singular market ,, let along series of disasters in diferent regions will affect European multinationals severly.. we are talking naightmarish earnings fall.. I wrote to you from London in July,, that the City expected worse earnings going into 3rd and 4th qt ,, with no recovery going into 99..
How about good old USA,, believe it or ,, US singilarly by demographics by land masse and by dollar power equals all of Europe or all of Asia or Latin America and Africa combined,, at same time the overseas exposure by US multinationals average 10 - 20 % ,, in other words US is still insulated from the rest of the world,, but don't let that fool you ,,,if the world goes to pots,, US will too ,, a bit slower..
Clinton's video clips ?
That is whole another matter .. and I believe market already has discounted Bill and his dilemma,, to further indulge in the subject other than to say that I think Starr has violated Clinton's constitutional rights by publishing his referrals on the net,, rather than submitting it to an appointed judge,, would invite members discourse and since this medium is a one way street coming from this writer,, it would be unfair,,
Now that I have given you why we had a down day today ,, what's next ..
I believe,, we will have several mini rallies before the full impact of the earnings from more multinatiols both here and abroad hits us like two by four ,, right smack between our eyes,, I maintain that we have a week or perhaps of 2 weeks window on this mini rallies ,, and that internet sector ,, oils,, utility ,, pharmaceuticals and airlines will be the back bone of this rally ,, while the broad sense of market wil linger,,
The first rally I feel will happen tomorrow or next week ,,early ,, due to ,, declaration by Japan's ruling and opposition party to consolidate ,,nationalise,, and bail out their banks,,announced tonight ,, their PM needs to have this in his hand before he meets with Clinton and Sec. Rubin in Washington this Thursday,, if not expect a US retaliation ,, by means of tariff and sanctions,, in no uncertain terms Rubin has delivered the message,, as Japan is enjoying RECORD level of foreign reserves,,, thanks to your love of Hondas and Sonys...
This will be the impetus of one miini rally.. second,, G-7 ,, resolution or at least a sound bite next week or week after will give us one more rally ,, and that is it,, I do not see any other reasons for this market to rally ,,, as we approach october window dressing then November cyclical short falls and year end tax write offs...
We go short as a strategy to gain wealth ,,, as I called PG ,,GE,, AMZN, INTC,, HNZ,, CAT,,XON shorts,, I am calling CPB,,USS,, et al shorts,,
I am preparing a long list of shorts ,,that we could theoratically ,,short all in equal proportion ,, like throwing a dart ,, and just by sitting and waiting ,,from right entry to the right exit,, I see that we will be 90% successful and gain 20 - 100% from each stock by the end of the year ..
I will send this list out to SA members over this week end ..
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