To: IQBAL LATIF who wrote (39661 ) 5/14/2001 10:51:36 AM From: IQBAL LATIF Read Replies (2) | Respond to On good news market sold on Friday as the news were too good for a huge rate cut, the retail sales pick up was showing sign of economy that is not tail spinning into recession. However market seems to be pre-occupied by rate cuts not the economic strength so they sold the market hard. They want more rate cuts not better economy but imagine if rate cuts do not bring the necessary cure that is better retail sales what they would have done? They would have sold it even harder! The dream of Nikkei like situation would have started materializing, the argument that interest rate cuts by FED, higher M2 or MZM unable to help the markets would have had very enthusiastic doomsayers who would all descended on this thread with typical ‘I told you so,’ at the head of that party. That was not to be, but the market sold as the good news as they wanted more cuts but I say cuts are not the cure they are just a medicine to cure the lowdown if the symptoms are being addressed we should have bought the market, however these are typical preoccupation with believes. ‘We cannot be wrong’ syndrome is affecting a lot of doomsday predictors and hence this listless movement of the market may continue for some time. Today we had inventories that showed a second month of decline but not good enough to improve the sales to inventory ratio below 1.37, the industrial production was down and so was capacity utilization the two levels interestingly close enough to a level from where the economy bounced in 1991 recession cycle. In my opinion if market logic of a strong economy deserved a selling a weaker number today deserve a buying but these are seesaw days and the market going to move in this range of 1218 on lower stopping out area and even 1213 and 1268 on the upper end, this is the part of the major 1228-1328 range, we need these ‘days of consolidation’ for reason very apparent we are nearly 700 points away from a old high of DOW, the way it looks with MZM, liquidity and economic figures we are going to make a recovery soon and that FED based recovery at these levels need to sure that direction of breakout on DOW is right, I think that as far as CPI remains under control the move here at these levels would only prepare a DOW breakout, I will think that today we would see some consolidation in DOW.
