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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (65158)	8/3/2003 3:29:42 AM
From: Real Man	Read Replies (1) \| Respond to of 94695

Thanks, Bill - we'll see how long they can keep what's happening to Fannie and Freddie under the rug. The Fed is buying their debt with both hands, and keeps it quiet. They have to. So, I guess, so far they (big money) decided it will work to stop the flood. Will it? Bond Auctions of 60 billion dollars total are scheduled for Tuesday, Wednesday, Thursday. The Fed will have to buy it if nobody shows up. If nobody shows up, it will be very bad for bonds. It's a bit too early to call for allocation traders to start rotating back into bonds, since everybody seems to be using pro forma earnings for this model.

To: William H Huebl who wrote (65158)	8/3/2003 10:44:32 AM
From: BubbaFred	Read Replies (1) \| Respond to of 94695

Maybe it's time for Papa Bear Vi to be right on the nose once in a while, and particularly this time. Most of the market technicians who use MACD, Stochastics, Momentum, and Moving Average indicators have been expecting a pullbacks for the last two weeks. They are now looking for a 10% pullback which they say it's healthy for the market. Their reasoning is the upmove since May has been excessive, given the very mediocre economic growth picture and the still murky outlook. I think the longer it takes to break down, the harder it will fall. Amateur-Investors has the following weekend commentary: "Yesterday we looked at the fact that periods of low volatility are followed by high volatility and that periods of high volatility are followed by periods of low volatility. Obviously, we are in a a tight trading range (low volatility) that will likely lead to a substantial breakout one way or another. Which direction that breakout will take is never perfectly known, but let's look at some historical statistics to guide us. And, in my opinion, the best indicator to help get us to an opinion is the VIX. Through today, the VIX has gone 98 consecutive days without making a new 20-day high. This ties the longest streak since the VIX's inception in 1986. The other time this happened, it ended on 9/6/00. After making that 20-day high, the S&P immediately lost 10% of its value over the next month and a half. The third-longest period the VIX went without making a new 20-day high was 72 days ending 8/11/87. This preceded the crash of October 1987 The fourth-longest period was 71 days ending 1/24/03. From there the S&Ps fell almost 7% in the following 3 weeks. What does this tell us? That at least looking back, when we've seen such sustained periods of low VIX readings, the market has responded by dropping. Now, I'll be the first to tell you, this absolutely does not mean that is what has to happen again. There are many good solid reasons prices have risen over the past 4 months. But, when you look at things on a historical and statistical basis as I do, it's sending us a strong caution sign and saying that it may be prudent to start locking some profits in. And, if you're very aggressive, the better opportunities for outsized gains, may be to the downside, especially over the short-term." amateur-investors.com