If as expected AG drops the rate Fri or Tue all should be well until Nov when he drops it again... The dollar needs the stabilization. Since the Japanese govt has decided to support their mkt and fix the banks all the J cash is running from our shakey mkt and bonds--- AG gotta do......... FAST! AND knows it!
That is a positive sign, However, it is only part of a much larger picture, the US could still be subject of the ills that affect many economies at present, including, corresponding trade deficits that in turn affect currency valuations, and so on. Just ask any floor trader in the Yen Futures if they can explain the recent huge move in the Yen....
2 days ago 130 ¥ = $ 1.00 US today 118.00 ¥ = $ 1.00 US (Big move)
I do not pretend to know the detail and how they interact with a possible resolution of the current battle between the bears, bulls---and proverbial pigs--- but I certainly do not believe that everything has been resolved.
Most importantly, it is difficult to determine the "When" of such resolution.
One good thing for Lucent that could be a big positive, is the possibility that the Yen may be starting an up trend vs the Dollar.
Usually in currencies, established trends tend to last for long periods and are fairly "safe" trend.
This is important for Lucent, because if such trend continues, it may lower the possibilities that China would have to devalue the Yuan, this translates into good news for Lucent since LU is selling a fair amount of equipment in China, and the prospects for future sales improve, i.e. US parts and service becomes less expensive (or at least does not become more expensive in their currency).
Having said that.... read the following and pay particular attention to the last paragraph of this particular article:
I copy a passage from a newsletter called : "Trends in Futures" re: the Yen.
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Japanese Yen: For months I have been warning about the high risk of shorting the Yen and yet last week was enticed to short the market when the correction appeared to hold below the Fibonacci
38% retracement level. This looked like a good selling opportunity last Wednesday, when Trends In Futures was written. However, weekly
stochastics did not place a sell signal crossing on the October 2 close. This was an important warning.
The October 7 opening gap of 469 points underscored my advice from August 20: "while shorts are technically correct in their position, there is substantial risk of a several hundred point opening gap in the IMM futures contract. I believe there are better reward /risk
trades available than shorting the Yen."
Technically, the Yen picture is quite bullish, although prices have reached an overbought level. The MACD histogram has moved up through both its signal and zero reference line, signaling the start of a bull trend. Stiff resistance can be expected near .9000, which is both the June 1997 correction high and a 38% retracement of the April
1995 to August 1998 bear market.
Low-risk entries are often difficult to find after such a vicious reversal. One technique I favor under these conditions is an inside bar entry. Generally, a market can be expected to back off a bit after such a large run-up. This resting period often forms a bar with a lower high and a higher low than the reversal bar itself.
A long entry is then made on a stop above the high of the inside bar. Once filled, the stop-loss is placed just below the low of the inside bar. Either daily or weekly bar charts can be used to formulate
this trade. Penetration of a weekly price high is more significant than a daily high and I prefer to use a weekly chart if the size of the inside week does not create undue risk. top I first detailed on August 20. This move has already exceeded the minimum objective of the
rising wedge top formation at 94.65.
Significant chart support lies around the 90.00 level, coincid-ing with the May 1996 rally peak and a Fibonacci 62% retracement of the 3 1/2 year bull move.
I have previously detailed the potential impact a dollar collapse may have on both physical com-modity and financial futures markets. Physical commodities priced in dollars become much more attractive to foreign buyers, increasing demand.
Foreign investors have been attracted to U.S. financial markets due to both rising prices and a profitable dollar exchange rate. When foreign investors start losing money on both their U.S. investments and the dollar exchange rate, capital flows will reverse. Traders and investors should not underesti-mate the effect of this reversal in sentiment, as it is likely to become a vicious spiral.
As foreigners repatriate their investment funds, a larger and larger dollar surplus is created — increasing pres-sure on the dollar's value. The sinking dollar, in turn, forces more U.S. equity and bond dumping —increasing the supply of dollars.
The effect on U.S. financial markets will be magnified when domestic investors throw in the towel.
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Editorial feedback: Briese@ibm.net
Copyright Steve Briese.
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In addition......
As we speak, there are new turmoil brewing between Trkey and Syria:
*****Copy start (from the economist ) www.economist.com***********
A new and bitter brew in the Middle East
ANKARA AND CAIRO
Turkey and Syria are close to blows, raising fears of a wider conflagration in the region
TEMPERS are running high in the Middle East. Turkey is thumping its chest, threatening to trounce its neighbour, Syria. Israel, usually a party to local squabbles, is ducking out of this one, protesting innocence. The region's self-appointed referee, Egypt, has waded bravely into the fray to cheers from the Arab stands. This is not sport, however.
Turkish newspapers speak of possible air strikes on Damascus, and the Turks have reportedly dispatched troops to the Syrian frontier, cancelling leave for soldiers stationed there. Syria, which has also moved troops to the frontier, has called for a unified Arab stand, noting that it has mutual-defence pacts with Saudi Arabia, Libya and Egypt. Turkey meanwhile has forged an alliance with Israel that squeezes technologically backward Syria between two vastly stronger enemies. These are the broader strands of a web that links elements as far afield as Greece, Iran and the United States. The conflict may well spread.
Relations across the 880-kilometre (550-mile) Turkish-Syrian border have never been good. Turkey's chief of general staff has spoken of an “undeclared war” with his country's southern neighbour. Why has Turkish patience now snapped?
The declared reason is that the Turks have suddenly got fed up with Syrian support for the Kurdish Workers Party (PKK), the guerrillas whose 14-year insurgency in south-eastern Turkey has cost over 30,000 lives. The Turks believe, as do their NATO allies, that many of these rebels receive political indoctrination in Syria and training in Syrian-controlled Lebanon. Despite Lebanese claims to have expelled all PKK activists, there are still thought to be training camps in Lebanon's Beqaa valley. The PKK's leader, Abdullah Ocalan, keeps an office in Damascus and has, the Turks say, a Syrian resident permit (Syria denies all this).
Yet, on both sides, the conflict goes beyond the immediate issues. The Turkish army, which brought in the current government, has grown increasingly frustrated by its inability to eradicate the PKK. More important still, Turkey is haunted by what it sees to be the swelling power of Kurdish nationalism. It was dismayed by its exclusion from last month's peace accord between Iraq's two main Kurdish factions (see article). Indeed, it much preferred the previous arrangement, under which the Kurdistan Democratic Party allowed the Turks to attack PKK units in Iraq whenever they liked in return for arms and money to fight the Patriotic Union of Kurdistan.
Adding to Turkish unease, the PKK has been doing well diplomatically in Europe. The Turks, angry at being kept out of the European Union, saw further evidence of western duplicity last month when the Italians allowed members of the Kurdish parliament-in-exile (a PKK front) to demonstrate in Rome's parliament building.
For Syria, too, current issues are part of a bigger game. Turkey controls the head-waters of the Euphrates river, which supplies much of Syria's—and most of Iraq's—fresh water. Turkey's Arab neighbours have long pleaded for a deal that would fix each country's share of the water. Turkey has resisted. In 1987 it threatened to cut the flow off, and in 1990 it did so, for a month, to allow the lake behind its giant Ataturk Dam to fill up. Syria's President Hafez Assad, who is experienced at using Lebanese guerrillas as bargaining chips with Israel, has the same general attitude to the PKK.
Predictably, Syrian, Iranian and Arab League officials all say that Israel is the cause of the flare-up. Turkey, they argue, may have profited from fresh Israeli intelligence on PKK activity in Syria: Damascus is well in range of Israeli monitoring devices atop the occupied Golan Heights. Israel protests that it has nothing to do with it all. Its minister of defence even ordered the downgrading of routine patrols in the Golan, so as not to provoke Syria.
Into this fire and thunder steps Egypt. Having secured peace for itself 20 years ago, Egypt has long sought to uphold some kind of balance of forces in the region, believing this to be the only guarantee for a wider regional peace. In recent years that balance has tilted more and more in Israel's favour. Now, with formerly neutral Turkey—the region's sleeping giant—jumping in on Israel
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While this issue do not affect Lucent directly, (see map of Lucent's involvement in the world in their web page), LU is involved primarily in the US, some LatAm, Europe, and SE Asia, incl. China.
Wisely, (IMO), Lucent has avoided the middle East, much of Russia, and the vast area between Russia and China.... which some people call this region... Chaostan.....
The point of all this is that there are lots of issues that could affect the US stock Market, whether it is Syria, Japan or Santo Claus, it is irrelevant the point is that there is lots of Uncertainty.... and that is what stock markets do not like.....
So no question, an interest rate cut will help, but at present it may not be enough, nor it will be for a while, for the reasons above.
IMO it may take 6 months, and possibly more......
And having said that..... I refer to my earlier post of simply taking the stance of be a prudent buyer of a quality company..... buy a little here and there, in the longer term there is no doubt in my mind that Lucent will be a winner, as to predicting lows, bottoms, etc. Well... one can have fun but I for one, would not bet big on a specific point of "turn around, either up or down.....
Z. |
