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Jim Greening wrote:
My vote for what will make the market shoot up is MONEY FLOW. Money
continuing to come into the U.S. market and mutual funds from all the 401ks
plus the new scared foreign money looking for a safe haven after the Far
East money crunch.
The question: What will make the market shoot up towards Christmas?
And propose alternative answers:
1. Lower interest rates in an economy that is not recessionary.
2. Strong Christmas retail sales
3. Strong McClellan summation index (just recently went below 3000)
safe market signal for the next 3 months.
4. Bull market is solidly intact; all major averages above respective
200 day moving averages.
5. Yield curve downward shifted in most timeframes in today's IBD
which is a very positive signal.
6. External factors such as currency futures has hidden some of the
strong earnings reports from view on a temporary basis.
7. Improvement in sentiment indicators.
8. Strong US dollar as our economy will be strengthening while many
foreign markets are weakening.(implies foreign investment)
I partialy agree with Jim's answer. It will be monwey flow. But what will produce it? We know that the price of things in the market is the amount of money people is wishing to pay for it. So, my vote is for sentiment indicators, that will be linked to how each country is dealing with the loss derived by this world wide devaluation of their assets, including their currency.
My country, Brazil, is in a privileged situation, with an economy that is growing steadly, inflation under control, a program of privatization that is everything that the europeans say that will do but are not doing. But the stock market is suffering and stocks that "should be" in a rally are going down.
My understanding is that for the first time the globalization of the financial markets are being really tested and the consequences perceived.
The Mexico crisis was the avant premiere of this new environment but the "protection" given by the USA to Mexico by that time was seen only in the context of commom participants of the same market (ALCA). Now we see that the interestes of the countries are more interrelated than we could suppose and its scope is global. Of course the specialists must know it (I am not a spcialist and not even an economist). But even if the specialists did know it, those who make the policies and strategiesof the nations did not have been exposed to the problem and as usually did not have the will to prepare the global economy with the instruments to react and not suffer from this new situation. Creating the instruments for keeping the international economy stable is the new challenge of the governments. This may mean we are about to have a new Bretton Woods to provide the international regulations to take care of this problem.
The sentiment, the expectations of what is up to come is what will drive the market deeper or take it to a new rally and the news about reaction of stock exchanges all over the world, the news about the harm suffered by your and each country will shape this sentiment.
This is my vew of the process. I would like to know how you friends, with other points of view, other priorities, interests and focus think about what I said. Is it a bunch of silly thoughts?
Mario
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