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To: ild who wrote (188004)	8/15/2002 11:11:59 AM
From: Knighty Tin	Respond to of 436258

ild, Good article by Roach and pretty brave after oil, NG, grains and platinum all zipped up yesterday. I still think it is goods deflation and services inflation for now. He could be right about bonds. I have had a bearish bias for most of the year, but the absence of profits from buying bond puts has made me suspect that I may be betting wrong. <g> Since our CPI and PPI mostly guage goods inflation, the numbers could go negative at some point.

To: ild who wrote (188004)	8/15/2002 12:04:29 PM
From: ild	Respond to of 436258

Thursday Morning August 15, 2002 : Special Hotline Update Over the past several weeks, there has been a great expectation from short-sellers that Wednesday's deadline for CEO's to certify financial reports would be accompanied by a rain of "other shoes" dropping. I suspect that Tuesday's decline was more related to that fear than to disappointment over the lack of a Fed move. When no shoes dropped on Wednesday (other than UAL's bankruptcy warning after the close) that thesis was disproved and shorts ran for cover. The rally was on uncomfortably low volume given the size of the move in the major indices. It is still important for volume to expand on rallies. Until that begins to occur with regularity, this advance will remain somewhat suspect. Even in the event that this rally is simply a counter-trend advance in a bear market (which is my opinion), the S&P 500 could advance by nearly 20% without moving above its 200-day moving average (which is a typical resistance point during bear markets). That's certainly not a forecast of such a rally. But advances of even that magnitude are not unusual for extended bear market declines. Even during this bear market, the March-May 2001 advance was 19% in the S&P 500, and the September-December 2001 advance ran slightly over 21%. Again, that's not a forecast, but it is a reminder that even substantial rallies can be consistent with ongoing bear markets. hussman.com