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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: t2 who wrote (76617)	5/7/2001 4:57:05 PM
From: Robert New	Respond to of 99985

I am in the camp that also thinks we'll see some significant selling after the Fed meeting thus I will be exiting my trading positions between now and then into strength. I also do think that we'll continue to see a bias to the upside in the interim given our most recent action/volume. Did take on a couple of positions towards the end of the day given the light volume in selected issues. Not sure what to take out of the CSCO earnings tomorrow evening. Would appear as if most of the bad news is already in the shares so any uptick in orders/sign of visibility will be construed as a positive. We will know in about 24 hours...

To: t2 who wrote (76617)	5/7/2001 5:15:29 PM
From: Keith Feral	Read Replies (1) \| Respond to of 99985

The buy the rumor and sell the news trading philosophy does not stand up to empirical review. Witness the fact that the yields on the long end of the Treasury curve have actually declined in spite of 4 consecutive rate cuts by the FED. Only the yields on the short end of the curve have declined this year. The bond market takes at least 6 to 9 months to digest the change in the direction of interest rates. To buy the rumor of FED cuts and sell the reductions in FED funds rates has only provided a headache so far this year. The market needs time to digest the real negatives behind the reduction in interest rates, especially higher unemployment rates, before the long bond can begin trending lower. The macro picture for inflation is very tame despite rising commodity prices - thanks to global competition. The negative economic events are just beginning to unfold. The rapid rate of corporate downsizing will leave companies scrambling to rehire in 12 months once orders pick up. It is the same thing that happened to the oil sector 3 years ago. The room is still there for short term rates to fall to 3% and long term rates to fall to 4%. The FED's next interest rate cut will be in response to rising unemployment on May 15. The FED must keep cutting until the yield curve is completely re-inverted before things get better. By that time, money will be chasing stocks to catch up to the mounting returns in equities as the opportunities in fixed income dwindle. To sell fundamental improvements in the liquidity of the market defies the the current trends. Money flow is going to keep pouring into the market through 401K plans which have only 1 place to go - US equities. It seems to me that now that we all have become professional bean counters and arm chair economists, it is time to keep the fundamentals of the market in mind. The dollar cost averaging of 401K Plans into the market is already beginning to benefit many of the big cap names like MSFT which account for a significant part of the S & P index. Timing the direction of the market from here has very limited risk return tradeoffs. Any non negative surprise is rapidly turning into positive reversals for stock prices like DELL. I think their work force reduction is a function of strategic restructurings as opposed to short term pressure on profit margins. 12 months ago all the tech companies couldn't figure out how to retain talent - ridiculous compensation plans and option packages. The market has figured out a new place for all this talent - the unemploment line. CEO's are all too willing to accomodate those wishes.

To: t2 who wrote (76617)	5/8/2001 12:31:45 AM
From: Boplicity	Read Replies (2) \| Respond to of 99985

I don't think we are about to see any explosive moves, in ether direction unless CSCO comes out with a hint of good news. I don't see CSCO or the market for that matter, going down much, maybe below 2000 as a little climax sell-off much like the climax up swing we just had on Friday. Just too much money waiting to get in that missed out on the initial rush off the bottom for the market to move down much from here. I find it a little unsettling that CSCO released the China news before earnings. Why not release the news after to support the stock on a better outlook? It looks to me that they didn't want the good news out of China being lost in the dust of a bad forward looking statement. Also, Chambers recent comments of a "U" bottom in the economy, seems like a hint to how Chambers views the world through his CSCO looking glass. B