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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: SusieQ1065 who wrote (10600)	10/30/2002 9:33:03 PM
From: SusieQ1065	Respond to of 57110

Getting Weaker The markets finished in the positive but the underlying strength was far from exciting. The afternoon rally was much weaker and could not hold the highs from earlier in the day. It was reported that equity funds saw outflows of -$16.1 billion in September and it was the fourth month in a row for net withdrawals. All indications are that October has not changed and funds are still bleeding cash. It appears the expectations are still proceeding according to plan. Funds still bid up stocks at the close but with far less volume. The tech stocks, long perceived as the place to be when a recovery starts, saw the strongest gains with the Nasdaq gaining +26 points. Big cap techs IBM, INTC and MSFT all found buyers as liquid stocks where funds could park money. They did not do it blind. There were huge blocks of puts bought at the close with 1250 IBM NOV 75 puts in the last 2 minutes as an example. Tomorrow starts the economic flood with these: 08:30 Jobless Claims 08:30 Q3 GDP 08:30 Q3 Employment cost Index 10:00 Chicago PMI 10:00 Help Wanted Index Those are minor compared to the economics on Friday. However tomorrow is the key day. It will be the last day that Funds will be propping up stocks to dress up their statements. With outflows still heavy they do not have a pile of cash left to throw at the market. With nonfarm payrolls and ISM on Friday they could be hesitant to place any more bets. Any long stock positions may be hedged with puts or more likely futures, which can be traded before the open to protect against bad numbers. For retail investors like us we will be watching the blow by blow from the sidelines (relatively speaking) and observing the setup for Friday. That is the first key day in my opinion. Funds will not have any reason to hold stocks they don't really want and the economic reports are likely to give them indigestion on the ones they do. The reaction to the news, good or bad, at the open will give the first real clue to what November could be like. There has still not been any Fedspeak about possible rate cuts and this close to the meeting I think that is an ominous sign in itself. With brokers calling for 50 points cuts and hyping traders into a frenzy there is going to be some real disappointments if nothing happens next week. Futures are down tonight despite positive earnings from several companies so it could be the lack of interest in today's trading is beginning to wear on the bulls. We have not gotten anywhere near 8500-8550 level since the first 30 min of trading on Monday. Definitely not a positive sign in my opinion. We will continue to stay short under 8550 and look for the Fed meeting next Wednesday as the pivot point for the markets. The wild card tomorrow is the Q3 GDP numbers. A huge drop and the urgency for a token rate cut would increase. A huge gain and bulls would begin shouting recovery. Bottom line: Keep those seatbelts buckled and your eyes on the Fedspeak.