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

To: TWICK who wrote (22469)	8/14/2002 10:10:16 PM
From: Susan G	Respond to of 26752

Wednesday, August 14, 2002 Market WrapUp Intervention Creates Optimism We all know that as long as we can keep the markets positive, the consumer will remain confident. And if the consumer remains confident, he or she will continue to keep this economy afloat. At least, it has thus far. It’s no secret from my writing that I give credence to the existence of a Plunge Protection Team (PPT). With that in mind, the primary goal of the PPT is to continue to create optimism in the minds of the consumer and optimism that the economy, i.e. the markets, are on the road to recovery. What amazes me these days is that the activities of the PPT have become much more blatant in recent weeks. This is especially true today. If you look at today’s intraday chart of the Dow, I’d say that around 13:30pm EDT and straight through to the end of the day was a classic instance of intervention. Leading to today’s actions started yesterday after the market learned that the Fed chose not to cut rates. As a result, the market took a nosedive in the last two hours of trading when the expectations of a rate cut did not materialize. Then Dubbya speaks last night about how the economy is not as bad as it seems and all the bad seeds would be hauled off to jail. The market opens this morning, as one would expect, down. However, as the day wore on and more CEO’s and CFO’s submitted their sworn affidavits to financial statements and the spin of the Fed meeting made its way across the media outlets the market started its move. All this news was portrayed as a positive and that now was the right time to buy, according to the media services. Did anyone really buy into it? Probably a few, maybe even some short sellers, but not enough to create the meteoric rise we saw today. The reality of it all is that corporate profits are still weak, people are still getting laid off, and the threat of war still exists on a very high level. With all that, who in their right mind would be buying this market? One thing for sure, its not the mutual funds, as their reserves are being used to cover the record amounts of redemptions they are receiving each day. Financial Markets The Standard & Poor's 500 Index advanced 35.42, or 4 percent, to 919.63, led by Wal-Mart Stores Inc. and Microsoft Corp. The Dow Jones Industrial Average surged 260.92, or 3.1 percent, to 8743.31. The Nasdaq Composite Index climbed 65.02, or 5.1 percent, to 1334.30. All three market gauges recorded their biggest gains since July 29. Two stocks rose for every one that fell on the New York Stock Exchange and the Nasdaq Stock Market. Some 1.51 billion shares traded on the Big Board, 4.5 percent below the three-month daily average. Treasury Markets The yield on the 10-year Treasury rose to 4.10 percent after sliding as low as 3.96 percent © Copyright Scott Middleton, August 14, 2002 financialsense.com