<<I will like to trade short below 1252 on SPH, I would think we may see this level and 2390 on composite may also be tested but equally I believe these supports to hold. Once these are taken out I would like 2200 on composite to be tested that would take SPH to 1192 area and BKX may hit 750, SOX at that point will be at 360.
Interim supports shall be 1228 and 1210 to go through these supports we have to see 9200 taken out on DOW. I still think that 772 will hold only if that breaks on two closing basis I would think that we can go short below 1252 to do that look at SOX and BKX closely 392- 772 break will herald huge pressures on tech.>>
Message from IQBAL LATIF on Feb 5 1999 1:19AM EST
On SOX and BKX we did see a drop to 368 and 768 towards the beginning market opened weaker gained some strength failed at 1255 and reversed back to test 1239 on SPH. This market saw a lot of volatility however this market is also very concerned with notion of getting on the wrong foot if they are caught short.
The recovery of SOX and inability of BKX to go through my 772 was excellent. Although, I shorted 1300 calls and bought the 1220 puts for March on SPH as soon 1253 was taken out. I did close the short calls with a profit of 21/2$ but left the puts as a hedge I did sell some covered calls of Yahoo against my 300 Feb and March longs.
I would think that 282 bounce from 268 towards the end was helpful to establish a positive ending note to otherwise a very ugly week for semis. On BKX also holding of this oft repeated support at 772 is a good sign that this may not be the beginning of the end.
The market closed below its 20 days MA and I see that 1228 is the 50 days MA of SPH for me if we have down so long why to not rattle the supports below 1228 and run thru 1224 area before going higher. If one's look at transportation or even RUT or DOW yesterday selling was restricted to tech laden NDX and composite or SOX DDX. The sectors, which have moved al little ahead of themselves, are being pounded. In my opinion we will see 2200 and 1920-80 being tested on composite and NDX if SOX breaks below 368 low.
Whichever way one may look yesterday action was continuation of the fears of rising interest rates, the theory holds if Fed does not cut, they need to jack up the rates. With global commodities showing no sign of turnaround although I did notice that OSX index came and tested that 48 low the fourth time around a turned around, I still think that we are going through a phase of strong economy and are seeing no signs of inflationary pressures. In present circumstance's for longer term and to mitigate the affects of 'asset bubble' rather a little induced inflation may do no harm.
The bottom line is that a strong economy leads to strong corporate profits, if we have this lousy and dangerous combination of weakening economy with falling commodity prices we may read that as an early signal of massive 'LATAMASEAN' contagion (my proprietary term please gg) spreading its wings over North America? I would at this stage worry more about stability and export demand from ASEA and Japan. The recent efforts of Japan to ignite demand is a classic example of at the lengths countries can go to activate demand. They are distributing free tokens to spend and imagine they are talking about monetizing of debt, here in US we have continued strong economy and behind that strong economy is a huge consumer demand, a economy that maintains this strength and keeps control on financial imbalances will do well.
Most of the previous booms have ended as a result of these imbalances and inventory distortions here we are seeing on one hand no core inflation on the other hand US despite being at the center of global economy has escaped the problems of Latamasean contagion. Imagine if we were to continue getting weaker numbers after recent rate cuts, the same people would have cried wolf and started harping about deflation.
It is non-inflationary growth and it is the long bond which will cure the imbalances if any or inflationary pressures, rising yields on long money is a kind of safety valve market already has. When from 4.67 lows to present 5.34% yields I can only say that smart money is fully realizing the impact of strong economy and accordingly ducking and covering. I will continue to selectively trade the dips and sell the tops. For me this is a band like 900-990 1192 or even as low as 1130 to 1292 is the new band, we have all these interim supports at 1228 1210 and 1192.
Keep trading these bands and at 2220 go long again in the very same stocks which Kurlack does not want, we have several times showed on this thread as to his absolute poor timing and will continue to do so. I would rather fear mantra's of deflation not a strong economy.. when the earning numbers come the next quarter it will be this strong economy that will trickle down to bottom line..If the marekt is at 1130 it will take off like a rocket from their so forget noise and trade the market within its interim short term trend..Love Ike |
