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Strategies & Market Trends : Trend Setters and Range Riders -- Ignore unavailable to you. Want to Upgrade?

To: SusieQ1065 who wrote (4934)	5/9/2001 10:54:14 PM
From: SusieQ1065	Respond to of 5732

Briefing-"Tech investors might want to take advantage of the bullish sentiment to start taking some profits off the table over the next couple of weeks." Updated: 10-May-01 General Commentary Once again, the tech sector absorbed ugly news from Cisco Systems (CSCO) without much pain... Ability to shake-off company's bleak earnings/guidance proves that bulls remain in control of the market, and that the path of least resistance (over the short-term anyway) is still to the upside. However, in order to successfully trade the markets it's important to routinely assess the risks to your portfolio... While there was nothing in the Cisco (CSCO) numbers to change current bullish sentiment, the report did provide a glimpse into the future, and as Yogi Bera once said, "the future ain't what it used to be." In short, Cisco's management said nothing to suggest an earnings trough in Q2... Though Briefing.com doubts there are many on the street operating under such an (optimistic) assumption, reality is that investors will need to brace for another nasty warnings season come June... Doesn't matter that we know the bad news is coming, the sheer volume will be enough to depress market psychology, if only temporarily. With the Cisco report reinforcing the upcoming earnings risk, tech investors might want to take advantage of the bullish sentiment to start taking some profits off the table over the next couple of weeks. Please don't interpret today's commentary as a change in our bullish stance on the sector... Briefing.com still sees lower interest rates, stimulative fiscal policy, softer Q400/Q101 comparisons and ample cash reserves as forces which will a) limit any near- to intermediate-term downside risk and b) propel sector materially higher into year-end... Just thought the Cisco report provided a good opportunity to caution bulls against complacency - especially with the earnings hurdle just ahead. Robert Walberg

To: SusieQ1065 who wrote (4934)	5/10/2001 10:50:54 PM
From: keithcray	Respond to of 5732

From StockBottom.com Churning Continues It turns out that spring Break skewed the employment data more than anticipated in the previous two reports, as today's numbers showed a 21,000-drop in jobless claims. Across the Atlantic, the ECB cut rates by a quarter, which sent the European markets higher. These two news events, combined with better-than-expected sales numbers from retailers, pushed the Nasdaq futures to lock limit up, while S&P and Dow futures advanced handsomely as well. So there I was, contemplating if the fear of underperformance, which is evidently present in the mutual fund community, could give the bull camp enough fuel to push Nasdaq to a test of the 200-dma and the Dow to a meaningful break of the 11,000 mark. Being an enormous believer in the market moving power by the collective psychology of the investment community, I can't exclude that possibility. However, certain alarms have been going off in my head that keep me from becoming sold on the bull case. And in this time of zero visibility and complete uncertainty, I will gladly err on the side of caution, although that could cost me in lost opportunities. But my stance is that if I have to choose between lost opportunities and lost capital, I will gladly wait for a better time to put my cash to work. I'd say that today's action gave bears something to cheer about, given the obvious absence of buyers after the gap up at the open. The only Index to finish positive was the Dow Jones Industrial Average, which closed at 10,910, up 43.5 points. The S&P 500 ended the down 0.36, at 1,255.18, while the NASDAQ fared the worst, ending the day down 27.8 points, to close at 2,129. In the chart of the S&P 500 Index below, you can see that once bulls failed to take out the highs for the day, traders simply disappeared from the buy side and a steep downtrend took place. We got another rally attempt between 12:30pm ET and 2:00pm, ignited by short covering, but late in the session, bears took control of the action. The lack of volume throughout the day makes the session a bit inconsequential though, because it shows that sellers weren't exactly pushing against the tape either. I can't blame them; it probably isn't too wise to be aggressively short going into the Fed meeting next Tuesday. As can be seen from the support lines drawn in the chart, if the broad market opens lower tomorrow, there will be some support in the 1253, 1250 and 1248 areas.

To: SusieQ1065 who wrote (4934)	5/12/2001 10:54:02 AM
From: keithcray	Respond to of 5732

Reuters Finance News Wall Street Confident of Big Fed Rate Cut May 11 4:14pm ET By Marjorie Olster NEW YORK (Reuters) - A worsening employment picture will prod the Federal Reserve to cut U.S. interest rates by another half percentage point next week despite some encouraging news on consumer spending, economists predicted in the latest Reuters poll on Friday. The poll was conducted shortly after the release of April retail sales data and a survey of consumer sentiment for May that were both better than markets had expected. After the data, one central banker said he saw signs the economy was stabilizing. But those numbers did little to sweeten the bitter aftertaste of last week's employment report, which showed U.S. payrolls shed nearly a quarter million jobs in April. The employment report convinced all but one of the 25 primary dealers of U.S. government securities -- firms that trade directly with the Fed in money markets -- that the central bank on Tuesday will cut the overnight bank lending, or federal funds, rate to 4.0 percent from 4.5 percent. One firm predicted a quarter-point cut. Most expect another reduction in June. "The Fed has seen a lot of encouraging signs in the jobless claims and today's retail sales but there still must be some nervousness about the layoffs issue," said Steve Gallagher, economist at SG Cowen Securities. Cowen forecasts a half-point rate cut next week but no more after that. After years of booming growth the economy slowed significantly at the end of last year, prompting the Fed to embark on a rate-cutting campaign to stave off a recession. In four half-point reductions since January, the policy-setting Federal Open Market Committee has lowered the benchmark lending rate by 2.0 percentage points, a very aggressive course of easing for the normally conservative Fed. SHOCK AT JOBS DROP The most convincing reason for the Fed to slash rates once again next week, economists said, was the shocking 223,000 subtraction of workers from non-farm payrolls in April. The unexpected plunge sent the unemployment rate up to 4.5 percent, the highest since October, 1998. "The drumbeat of layoffs seems to be continuing pretty loudly, so we are looking for further signs of softness on the employment front and that will be the driver," said Peter Buchanan, an economist at CIBC World Markets. Most leading bond dealers do not expect the Fed's easing cycle to end this month. Of the 25 firms polled, 18 expect another rate cut at the June 26-27 FOMC meeting, while five see no move and two made no call. Of those calling for another rate cut next month, 11 forecast a more gradual quarter-point cut while seven expected another half-point move. The poll results were little changed from the previous survey conducted after last week's employment report. "There's a better than 50 percent chance, unfortunately, that the United States has slipped into a recession. And the Fed tends not to stop cutting rates in that environment," said John Ryding, economist at Bear, Stearns & Co. in New York. BOND MARKET BETS ON RECOVERY Although the jobs situation is worrying, there have also been some encouraging signs in recent economic data. The Commerce Department reported on Friday that sales by retailers rebounded much more strongly than expected in April, rising 0.8 percent after two months of declines. Another report showed the closely watched consumer sentiment index compiled by the University of Michigan rose to 92.6 in May from 88.4 in April, much higher than expected. On Thursday, the government said weekly numbers of Americans applying for first-time unemployment benefits fell sharply to a level not seen in more than a month. However, new inflation data on Friday did not seem to pose any obstacles to further rate cuts. The Producer Price Index, which measures wholesale inflation, rose a modest 0.3 percent in April and 0.2 percent excluding food and energy. FOMC member Gary Stern, president of the regional Fed bank in Minneapolis, said on Friday the economy appears to be stabilizing at a modest rate of growth around 2.0 percent a year. Stern does not vote this year on FOMC decisions. The indications of what might be a nascent recovery in the economy have not gone unnoticed by the government bond market. Treasury prices fell steeply on Friday, pushing yields up sharply in a sign that traders and investors think the Fed does not have much more rate-cutting to do. The yield on the 30-year bond has risen about half a percentage point in the past two months and touched 5.88 percent on Friday, the highest since November 10, 2000. The rise reflects the expectation of rebounding growth and future inflation and higher Fed rates to combat that inflation. Even more telling was a sharp rise in yields, or rates, on two-year Treasury notes. Two-year yields are most sensitive to the near-term interest rate outlook and have shot up a quarter percentage point in two days to trade at 4.32 percent on Friday. That is only 18 basis points (0.18 percentage point) below the 4.5 percent federal funds rate. The two-year rate is likely to move above fed funds next week, which would be the surest sign from the market so far that it thinks rates are near the bottom for this cycle and the next Fed move is likely to be an increase to combat inflation from stronger economic activity.