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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: Investor2 who wrote (22258)3/1/1999 10:34:00 AM
From: Defrocked  Read Replies (2) of 86076
 
I selfishly want the equity market to go down
because I am short. I am short because the way
I read relative valuations and a mismatching of
expectations currently in the market. IMO stocks
have yet to negatively react to rising interest
rates. While rising interest rates per se shouldn't
make the market decline, given the high PE valuations
and that the recent and continuing bond market thrashing
was largely unanticipated (somewhat tautological), stocks
are due a good pullback based on models used by most asset
allocators. Moreover, tech stalwarts like INTC, DELL, CPQ, AMAT
MSFT also seem vulnerable here. If the best tech stocks and many
other equities can do during a Q exhibiting 6.1% real growth,
low inflation and low interest rates is to barely match expectations,
how will these puffed-up stocks respond to slower growth and
higher rates????

As a result, I am looking for a testing of the 1215 SPX levels, a
ginger spot in the market if I've ever seen one. Failing a sufficient
decline I'll probable cover my equity shorts around the 1255 area
and go back to selling bonds cause the only way I see bonds
going higher is with an assist from lower rates from the Fed, or
the anticipation thereof, which with I seriously disagree failing a strong stock market decline. If stocks breach the 1215 area I'd look
for a drop to 1175 which is about 500 Dow points lower from
February's close. BIDKJS.
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