Troy- Rate cuts or no rate cuts the market is poised for a break on upside—with a test of 1080 or without that is an issue here….
I have been writing on this rate cut possibility since last few days, I hope you can find my relevant posts, I would like to summarize few things..
1- I think for me 1130 area of consolidation historically is a major resistance or support, by history I mean last few times the market tore this resistance apart, I have my own reservations like I had when market was in shambles I remained on my script this is not a bear market a bear market for me is a market where investors would have had to close out all their positions under water, for market steep corrections are what oxygen is for human beings, the guys who have been predicting 6300 still do that we are 1400 points higher from the low when 1080 was being taken out they said buy puts, and when market was testing 1320 I remeber some one predicting for DOW at 6300 but little did he realized we were almost there on SPZ we hit 770 if we translate 1320 into equivalent points on DOW...
On these areas of resistance we may see some time been taken but a market making new highs on basis of macro economic fundamentals is a market one should fear the most, I have pegged 1130 twice in a run from ashes and my theory has been that the salient features of the market which has brought this market from 4000 to these levels are intact, it has and never been about few P/E's if that would be the case I will like you to notice RUT stocks how they have been languishing if one wants to find low multiples and high yields their is lot of stuff around, the problem is that the very same people who want to buy quality are stuck up with time they are not ready to pay, CSCO or MSFT or IBM when I went long IBM at 111 I was told watch your back man this is just few months back and if you go back we have been long IBM since 45$ at that level it was too expensive for these very same characters, if you need growth you got to pay for it if you need high returns we can go to a lot of stuff on sale at 10 p/e and 10% growth potential, the investment money is a coward money it follows the trail of greed and growth sometime they overdo it like Internets and some time the valuations get stretched but god quality stock can only be had at a certain lofty p/e this will remain the trait of this market or any market, even at 4000 INTC traded at 34 times earning or MSFT was still 40 times earnings, the issue is that of growth in my opinion we cannot have double digit growth in the stock market but 10% is very possible, I was looking at GDP's in ASEA we had negative growth in almost all the countries things will not remain the same we will see a lot of recovery and green shoots of those recoveries are already visible.
I would think that 1320 test was a great test and I must admit and claim that I received a few messages at 1320 that please don't go long here this is a perpetual bear market, but I was sure that when market will roar back up they would not even know what hit them roared it did, it came up like a rocket drying up the huge put premiums big time, than 8000 was called to be next resistance that was taken out than 8300 was a rock that was broken and than 8800 that was taken out so for me these guys are magicians playing with fire, for me market even if the rates are not cut will come down and will go back up mark my words initially it can sell but soon guys like me the ‘real guys' gggg will say come on man are we not expecting a rate cut as we anticipated global financial asset bubble to be burst so is AG happy with global markets –should this not be the battle cry of the bulls lets break this shackle of 1130 and take it higher-- the answer would be yes.. definitely, market reading when I was being made fun off about Clinton , Brazil, Asea and supporting intervention in Hong Kong is not about chance and error for me these swings are test of ones metal that is how you differentiate the real experience with little guy on the block I saw people who call themselves as gurus and specialists unaware of protective or defensive strategies.. market needs to played both sides with vigor and a road map.
I would think that every new high within a break is point of concern every one can see a double top but it is the background interpretation of breaking a double top which is important. I see that rate cut environment and overall conditions call for a new break out with or without rate cut, I am not bearish although for me the easiest thing is to break and say come on 300 points are on the way, I would think this down possibility exists but I see that wave up will be equally dramatic so far I have only seen excesses in internet on the bull leg some excess on the upside is very much due, this consolidation and move is very special I see all the necessary ingredients that may take this market to break old highs.. but I would think we will see that divergence continued NDX will little bit lag and composite may take the lead same for RUT some decline form here like 370 test and will roar from their.. I see a good possibility of a 1080 test and 1389 test on NDX that would take my composite to 1771 but that is about all is visible..
I am shocked at the naivete and lack of common knowledge that some of these gurus display, look at UK we had .5% rate cut the market sold off 300 points came back roaring up, the reason the rate cut higher than expected was considered as BOE worried stance for future, here you have a situation we have rate cut we will see that market go up to 9000-9200 and comes back down RUT will drive the market higher from these levels DOW role is limited it will be BKX which will go and hit 890 if we have rate cut transportation and composite will benefit will see 2000 on composite but DOW I will think will lag, if we don't see a rate cut this will be taken as a vote of confidence by AG on future of the markets, we will see a initial sell off but it will roar back up and the point will be around 1078 I will pint it for you, rate cut or no rate cut we will see this trading band on 1070 and 1180 level intact, the chances that market rally better without a rate cut in my opinion are higher for me a rate cut will soon become a problem I would like that AG keeps some armor in the box, I expect that we should soon hearing rate hikes as wage pressures and seasonal employment numbers put inflation below 4.3 %--- so keep your fingers cross- keep your reasoning straight.. I can keep calling that market will go down but when I have said market will be up --out of 100 posts 95 has been negative so with this track record I will be weary of guys who are permanent bears... I will look at 1445 on NDX very very carefully I will be short below it until 1380 is tested I reverse from their... nothing in this market to worry about rate or no rate cut is a trivial matter people who trying to read too much are the same people who never capitalized on the most recent correction, every guru is long at 8300 market is not that easy if 8300 will be tested we rather go to 7900 and stop these longs to close the year higher....... |
