Jenna, nice Mon review.I plan to be active. I think the level of anxiety will be much higher because of new adverse realities slowly sinking in. Yes, we may get an earnings rebound in June-July but I think it will be more of a shorts relief rally in a bear
market.
This is an excellent time to start shorting all the high PE stocks, technology, Financials and Brokerages especially e-trade type.
There isn't much to look forward to. Here is a sample of the gloomy future as it will slowly sink in in people's mind:
#1: surprise increase in CPI. And #2: How do we know we won't get another surprise next time too?
#3:surprise that the increase in CPI was due to oil which we all thought was dead.
--Reality will sink in that oil increases are here to stay for a while
--because
--a)OPEC has seen a dramatic price increase if they stick together
--b)Few oil reserves will dwindle.
--c) US oil reserves are low
--d)Business Week last week reports that OPEC has cut new oil well exploration money to half of 98.OPEC saw last
time that any new wells will lower their prices.
--e)Exploration is down. To open new wells takes time.
--f) We are entering summer travel season.Won't help bring prices down.
--g)Perennial non - complier Venezuela is even agreeing to cuts ---because they have been though too much pain with low oil
prices the last 3 years.
--h)All OPEC has experienced pain the last 7 years with low oil prices.They are now working out of pain. I think it will be
a year before this cartel breaks again.That's enough to bring quite a market correction.
--i) OIL gets into everything.
I wonder if we'll find soon that part of the reason that the non-oil CPI increase occurred WAS because of oil.
--j) Asia's supposed recovery will keep oil prices up.
#4: surprise? increase in interest rates. This will revive in people's minds the old TWO previous axioms:
--Axiom a): Bull Markets are toppled by unexpected events: Certainly you can say that oil price increases that
stick in an unexpected event.
--Axiom b): Higher Interest Rates are VERY GOOD at toppling bull markets.
#5: Following a realization of the above, people will look for other signs of a topping market, and guess what, they are all
there:
--a)Frothing at the top: The Internut mania.
--b)Cyclicals rise at the end of a bull market: Internat Paper & Alcoa <g> up 50% in 1 month!!
--c)Sky high PEs
--d)The Bears have to throw in the towel. My sign for that is Merrill Lynch ( a bear ) hiring Blodgett whose fame came
in recommending Amazon.com the flagship frothing stock.
Other minor gloomy events to look forward to:
$6 Earnings season is past.
#7 The engine of this bull market, Technology has been hit hard with
PC companies under performing ( DELL, Compaq ) and becoming commodities.MSFT in dog house.Telecoms will be
mired in Congress for access issue resolution and mergers.
#9 We are entering slow summer season. Xmas is over.
#6 Just around the corner awaits us October, <G>, and y2K, <G>.
#7 Rubin gone. In these upcoming tumultuous time we have
--a)Larry Summers to guide us straight out of Academic Harvard, hot bed of redistributive philosophy, the poison of
growth.
--b)#7 Our illustrious el Presidente,aka derr slickmeister, whose focus is saving his skin at the expense of eveybody else.(
Chinagate, Bosniagate,LosAlamosgate, you name it ).
I hope you have a good week ahead,good luck, we'll all need it, <g>
TA |
