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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: The Perfect Hedge who wrote (27804)	7/27/1999 4:57:00 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

Beeble brox.. I think as I have said earlier we are going to be locked in a trading range, if you look back my first target was 1430-40 and long term objective was 1530.. the reasons are that until we have clear indication that interest rates would not be further raised the market will sell on peaks. Macro economic background suggests that it will not be very easy for AG to discern from economic data, even if we rally the market would like a word from bespectacled sage of the markets. He will looking at lot of things and his ways to stop or give a green light to rally, in Sept nad oct of last year in dropping yields we had this great run because he was worried about 'global liquidity' than, now he see global increasing demand and would be carefully noticing that global demand may not lead to overheating. Lot of things to worry about US corporate carry in retained earnings an amount equal to 15% of market caps of S&P 500 in otherwords Us corporations can today buy back their own shares of S&P 500 companies with their own retained earnings, it is like a currency board where ideally every floating peso may be backed by a $, here every free floating share ( in liquidity terms the portion of shares traded in the market are not more than 15%- most of the shares are held in for long term holdINGS like big funds or Mr Gates 125 milion sharea of MSFT) in the market is backed by cash on present prices, that goes for the argument that valuations are out of blue. Any way I will handle this cash flow issue more conventionally.. In my opinion the corporate cash flow that is increasing at a huge pace will keep expansion going, US corporates are carrying 851 billion $ as retained earnings, in this environment of low inflation they are going to invest in improving productivity gains. The times when cost increases could be passed on are over, today they need to cut the cost and improve the margins. Another factor is export are on the rise again comparing to last year the exports are 8.7% up for May, that would lead to increase factory output. Now we will have this 29th July report despite of strong domestic demand and consumer spending alongwith business investment I think the report will be mixed the mortgage applications are now dropping from a peak of 315 thousand, trade deficit is going to put a huge drag on second quarter growth, that alone according to BW will shave 2 percentage point from GDP growth. The market would be happy if we have 3-3.5% growth for the quarter down from 4.3% form the first quarter and 6% from the third quarter. In light of the above and second quarter earnings race to stunning 21% gain with revenues climbing 9% the trned is double digit growth in profits, this will not be ignored by the markets, what you are seeing is 'trading opportunities' for the traders that had so far a bad summer the market was locked in range, they were really not making any money, fear and greed the two major factors that drive the market are in front again and hence the ranges of 25 point move interday provides them with running the stops on both sides up and down, they literary do it every day, we need to be contrarian in this market. Due to uncertainities the future looks vloatile as traders and S&P future guys can now play the news very well, they would take the market to support and take it up the inter day movment next day will all be forgotten it just noise but it is lot of money if you trade your positions the way pits do, that is you are seller at the top and buyer at the dip with a 5 point stop loss. I see A&P going back to old highs even taking them out to 1455 area but I also see 1280 level to be hit, I would see 2211 test of NDX a must so would be Comp 2694, whenever market comes so far they come and kiss the floor. I would also like 550 on DOT but I think that valuse are immense in that sector.. I would like tto reiterate that one off the best would be to look at soft bank a Japanese company, I had a dinner last night with the analyst who identified this stock to me, the management is great and this is going to be a bagger as it is out of faovour as DOT takes a beating. Now I am also a firm believer in supports for me my ideas that market is nicely prized has no value when the trend tells me something different, that is what the difference is I don't sit and try to bring the marekts to me like many do! Lamenting and cursing the bulls not the pseudo- ones, the market is showing me a trend it can if it breaks 1348 has all the potential to test 1328 1302 and 1280, in this case we can see 200 day MA of DOT that lies at 498. that is not my objective but my trading discipline tells me that one should be prepared. Like I use to make long positions in similar fashion unless 615 DOT, and 492 on SOX, and 590 on PSE, and 450 on RUT, BKX 888 are not breached on two closing basis, we will see that in wake of the pre-dominanat indexes weakness on SPU will keep the market range bound, I will trade within my parameters, a bounce of 2211 area on NDX will be a good recovery signal, I will at htat point may take long index positions with tight stop losses, my favourite would be BKX SOX DOT.... The momentum in the market and volatility is induced by SPU, wherever I have written about SPU inevitably questions have been asked what is SPU? That really worries me for one reason if Futures and Cash S&P is not fully appreciated, one will never be able to understand why market gyrates so much in a single session? In a flagrant violation of market 'time tested rules' most of the analysts and self styled gurus don't even take that factor into consideration, imagine calling the market through eys of DOW index the most unrepresentative. naturally I am not a darling of these guys as the hurl denunciations but I do let them know market is not about feeling toppish or feeling bearsih or bullish, take from market what it gives you and understanding market is a every day job instead of running when the selling comes 'pay your dues and learn'. For a daily in and out trader the 'mastery of action of pits' is the first step. Knowing SPU and NDX on list of most liquid contracts these two are amongst the top ten.. is first towards becoming a full time day trader..