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

To: advocatedevil who wrote (45931)	4/26/2001 10:30:39 PM
From: Jacob Snyder	Read Replies (1) \| Respond to of 70976

ST trading and other random musings: Another down day, but AMAT and NVLS and KLAC still haven't given back the 4/18 gap-up-above-resistance. I keep on waiting, saying every day, "OK, I'll give them one more day to prove this isn't a new support level". Last time I thought there was an upside breakout, in late March (and covered all my shorts), all the stocks promptly fell 30%. This time, I suppose I'll hold my puts, and the breakout will be real. Argh, ugghhh, and double-plus-un-good. This is harder than buy-and-hold. This can't last much longer. A couple of days, at most. Either we slip back down into the old ranges, or we bounce at former resistance levels and head sharply up. My main concern (with being short, that is) is that the Fed will keep on pumping up liquidity, and lowering interest rates, to whatever extent needed to prop up consumer spending and the stock market, and they will only stop doing this when inflation gets out of hand. Interest rate cuts start taking effect in 6 months (from January), but turning the liquidity firehose on full-blast has an emmediate effect, as we saw when the Fed was fighting the Y2K non-event. Pump enough money in, and a lot of it sloshes into stocks. So, the Fed could, once again, produce a huge (yet wholly artificial) rally, perhaps lasting most of the rest of this year, and taking the Nas up to 3000. If the Fed gets "easy" enough, inflation will get on the wrong side of 4%. In the last 50 years, that 4% inflation level has separated good times from bad, (for stocks and the general economy). Inflation has already doubled off the (very low) 1998 low. If inflation becomes real, then the Fed will have no choice but to cause a recession, to kill the inflation (like they did in the early 1970s). But they might postpone the recession till 2002. At today's closing prices, I'm ahead on two of my puts (NTAP, TXN), and underwater on the other two (JNPR, NVLS). I could cover with small losses overall. I really don't know what to do. Makes me think I should just sell all long and short positions, and sit in cash till I'm clear on what's going on.