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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: advocatedevil who wrote (45523)	4/18/2001 6:15:42 PM
From: Jacob Snyder	Read Replies (5) \| Respond to of 70976

short and medium term trading: Well, this was the rally I expected after the third rate cut. I thought they'd wait till the next Fed meeting for cut #4, but it was too long between meetings, I guess. The SOX is now 40% above its recent lows. That's a big move. The move is based on: 1)investors deciding that the fundamentals in semis will bottom in 2Q01, and 2)fed rate cut. So, at the moment, investors are seeing the rosiest possible future, and buying. Today was partly short covering, but mostly some of that 2T in sideline money coming off the sidelines. Panic buying today, just like we've seen panic selling, repeatedly, over the last year. Sold my TXN calls today, made 45% in 3 weeks, and it was a big position. Didn't add to my short positions today (started establishing them on 4/12), but I will if this rally goes on. All the techs had a huge gap up at the open, were basically flat all day, and faded somewhat at the end. The action recently looks like a classic bear rally. I'm still pretty sure we go on to new lows (that's why I didn't cover my shorts today), but I have no idea how long or how high the market goes first. It'll be interesting to see if we can take out the January high, on the SOX. I will probably sell my puts, and take my losses, if we do that. In the previous short-term top and bottom before today, AMAT and many other semis/semi-equips took out the previous range, in both directions. So, I'm less sure where the trading range is, now. Certainly, today, they all gapped up through previous resistance, and held those gains. At some point, the market will start asking, "what is the Fed seeing, that they feel the need to cut rates a full 2% so quickly?" I think the Fed is seeing a sharp decline in consumer confidence and consumer spending, and continuing declines in business spending, and turmoil outside the U.S. as we quit buying. The Fed is also seeing no inflation, so it is safe to lower rates rapidly. OTOH, by July, the effect of the first Fed rate cuts will start to affect Main Street, and that's only 3 months away. There is certainly a chance the Fed pulls the rabbit out of the hat (= gets a soft landing without igniting inflation). Remember how, only a few days ago, everyone was asking, "Should I sell my stocks, and go to the sidelines, to avoid further losses?" The answer to that question is still "yes". The only difference is, now, investors can get out at better prices.