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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: moufassa7 who wrote (49365)	3/19/2001 9:44:08 AM
From: moufassa7	Read Replies (2) \| Respond to of 57584

Short QQQ @ 41.40

To: moufassa7 who wrote (49365)	3/19/2001 10:10:25 AM
From: Rande Is	Read Replies (1) \| Respond to of 57584

I would not be BETTING on a rally off the FED meeting. We are still behind-the-8-ball and there is no "master plan" to call in the big guns to pull the markets out of trouble. At least not with the FED. Remember that markets move on perceptions and anticipation, not necessarily on reality. Our economy is not in that bad a place, but the CEOs who watch CNBC all day long, have become convinced otherwise. And because the markets don't move according to reality, the Po' Boys easily manipulate and profit from carefully tracking the viewpoints and attitudes of the retail investors. . . which is why their monitoring of these message boards is so vital. . . and why they spent millions on software to compile investor confidence numbers. The Problem: It is hard to imagine the FED not trying to bail out these markets. But I can't think of many scenarios that would end positively. Let's look at the behind-the-8-ball problem. The bond markets have priced in a half-point rate cut. The Fed Fund Futures market has priced in a three-quarter-point rate cut. Rate Cut Scenarios: . . . . If we were to get a 3/4 point cut, we would not necessarily rally, due to it being so widely expected. But worse, the media spin could spell FED panic. . . and the markets hate panic of any type. So this might very well end up being the worse possible scenario. . . . . If we were to get the 1/2 point that most would like, again, I don't see much of a rally off it. Oh, there will be some knee-jerking going on. . . .and short-covering on both sides of the announcement, but I don't see it starting a sustained rally. . . . . I am actually hoping for a 1/4 point rate cut with a strong statement toward continued loosening, and a statement that shows that the economy is not in as bad of condition as is being hyped by the media to sell advertising. But don't count on it. So Many Questions: So the rate cut amount is not nearly as important as the accompanying statement. What posturing will the FED take? Will they say "things really aren't as bad as they might seem?" Or how about "we are concerned over knee-jerk reactions by CEOs convinced that worsening times are ahead. . .making a recession a self-fulfilled prophecy". . . . or the boring "further rate cuts may be necessary as the economy slows." Will they say "slowdown", "recession", "deflation"? Will they address consumer confidence? I don't know. But a few things are clear. It is very difficult to devise a scenario that would necessarily cause a sustained rally. Greenspan understands the importance of the small individual investor giving up and selling out all his/her positions. Without sufficient capitulation, the markets simply will not reverse. And bulls are extremely stubborn. What Stubborn Bulls Might Say: Could Greenspan have failed to give a surprise rate cut in Feb/Mar so that the markets would have a better chance reaching the capitulation point? Ouch! Shudder the thought. Panic selling is the best thing that could happen at this point. "Get me out at any price!" needs to be echoing the halls of the brokerage houses. Should Greenspan hold up any serious-sized rate cuts until a day FOLLOWING a true capitulation, could that give us the impetus necessary to create a sustained rally? But those are just the ramblings of perma-bulls. Back To Reality: Greenspan will not move based on the markets. He will simply do what he needs to do. . . when he feels it most needed. And for that reason alone, I wouldn't be betting on this decision, but rather waiting it out. So what COULD happen that would cause a sustained rally? The only thing that I can think of that would cause a trend reversal is sufficient capitulation. And the media plays a key role in bringing this about. What could cause capitulation? A few days of panic?. . . worrying about a "global economic meltdown" based on Asia concern?. . . .worry about the U.S. economy crashing?. . . .concern about the FED not on the side of the individual? . . . a gold panic? . . . .a major corporation failure to meet interest payments? . . . Or is all this for REAL and we'll soon see Nasdaq 100 and Dow 500? The internet will be unplugged. And we'll all go back to farming. There really are a lot of individuals out there who don't understand the economy or the markets. . . who WILL most certainly panic, when that button is pushed. Best wishes, Rande Is