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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (37380)	6/21/2002 2:54:12 AM
From: Johnny Canuck	Respond to of 69925

Foreign Investors Lose Taste for American Investments By Ron Taylor 6/20/2002 2:57 PM ET The U.S. dollar is getting absolutely pounded on the news that the U.S. trade deficit ballooned to a record $35.9 billion in April. The three other major world currencies (the euro, pound, and yen) are all rallying in concert. Over the past three days, the euro has broken above key resistance level in the 0.95 area, and is rallying sharply again today. The yen has been holding up despite the Bank of Japan's best efforts to intervene. The pound has been rallying as if it were shot from a cannon. The following charts all clearly illustrate how much pressure the dollar is under. As we have talked about frequently on this website, this puts severe pressure on foreign investors of U.S. equities. Foreign investors must now contend with the both the losses from the continuing U.S. bear market and now are also getting hit on currency exchange. These two factors are slowing the rate of foreign investment in the U.S. According to Dow Jones Newswire, data released along with trade deficit numbers shows that "net foreign purchases of U.S. stocks were $25.0 billion in the first quarter, down from $33.0 billion in the fourth quarter." So basically this means that foreign investors are losing their appetite for the U.S. market. We do not feel that the U.S. consumer will be able to make up this massive drop in investment, and this is an additional contributing cause to the current bear market. Further declines to the U.S. dollar will spur foreign investors to pull more funds out of the U.S. market. The risk, of course, is that institutions, hedge funds, and large individual traders begin to do this all at once. The U.S. stock market remains under pressure from both domestic and foreign investors, and this market will continue its decline until this fundamental factor changes.