Market prediction. We're headed back down to the lower end of the current trading range - mid 7000's to about 8100 on the Dow.
The worries will revolve around the usual (growing list of) suspects, Asia & LatAm, Canada (commodities) real economies, with the addition of spotlight worries focused on hedge funds and similar derivatives speculations by a number of large U.S. and European banks. (Chase, JP Morgan, UBS, etc.) The concerns will focus on the growing possibilities of destruction of liquidity through the ravages to many of their net equity positions.
Whether we hold in the mid 7000's will depend on whether a number or additional nasty liquidity disasters, like the LTCM meltdown, detonate.
Some more buying opportunities should develop either way. <g>
Just an educated guess, of course.
Look at it another way. What's the reason for the market, overall, to really rally now? The reason for the Fed cut rates is, after all, not so bullish. (The slowdown could become a recession in the U.S.) The smallness of the Fed action is bound to raise fears that the Fed is acting too little, and will end up getting to where they need to go on rates too late. In other words, it's not that much of a confidence builder. Meanwhile, the view of the Larry Lindsays of the world (a former Fed committee member) that rate reductions in the U.S. don't really help liquidity at the periphery that much, will get more play.
Doug |
