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You know Joe. Before Greenspan made his surprise rate cut I had a feel for
the market. Now I don't. One thing I have noticed is that the market movers
have this perception of when events will effect their clients. One way to
think of this is a perception of time and what part of the big picture will
be ignored. For example if the ground was crumbling underneath our feet. The
market makers would concentrate on some very narrow events to still move
that market higher. (I have always thought that they were excuses.) I don't
always know how long they will run it up higher, but I do know that as time
goes on they leave a trail of answers of why they ran it up. (Or a trail of
excuses.) It seems to me that the ground that they have chosen to place
their arguments upon for moving the market higher eventually becomes to
small for their clients to except. Hence the markets move lower again.
I don't have an answer for your question but more of a suggestion to look at
the trail of events that have moved the market higher. To me, here are the
arguments I have heard so far:
1st - At this most recent bottom ( when CSCO was in the $40s ). It was the
buy the dip crowd. Folks who thought they found long term value in good
companies. CSCO, LU, etc.
2nd - Market leaders like IBM and INTC gave support to the market because
they are doing a fairly good job of managing themselves in these difficult
times.
3rd - Good ole government intervention - interest rates are cut. But most
important the message is we will not let the bottom fall out of this market.
We will not be so stupid as to let what happened in Japan happen in the good
ole USA. Today's speech also has that same message.
4th - Is where we are at today. A slowing economy that might get another
interest rate cut.
I am sure others will see it differently.
A couple of (last) things. If sanctions in IRAQ are lifted Russia can start
paying it's bills.
Maybe you don't look for a last fuse. But maybe try to find out what the new
rules are. I to am confused that good companies (small and mid cap) with
good earnings are getting trashed and some companies with poor earnings
outlook are going higher. The only thing I can see here is that when some of
these brokerage firms lost money oversees they had to cash out of some of
these good companies to raise cash.
Harley
Joe Frabosilio wrote:
> Hello everyone,
>
> For the past month I've been reading a lot of articles that say things
> like the fed or analysts are hopeing the market will rise and fear that
> it may go down. The articles are from Investors Business Daily
> newspaper.
>
> Today is another good example of what I'm talking about, "Russia won't
> be able to pay the more than $20 billion owed on foreign debts due this
> year and next, its government said for the first time."
>
> Page B15 Tuesday 11/5/98," Late in the session, the Federal Reserve
> released its much-awaited beige book----a regional outlook of business
> conditions in the US. The news was not rosy. Manufacturing is slowing,
> and retail business is lagging. That sort of news works against the
> dollar. It implies the Fed will be more likely to cut rates."
>
> And its to believe that credit card defaults will rise in Oct. Source
> Cnnfn.
>
> A couple of months ago with minor news like this the market would have
> dropped 200-300 points, now it just keeps moving up.
>
> Does anyone who has been in this kind of market know what will be the
> last straw? Or does anyone know what the change of heart was in 1929
> and 1987?
>
> Thanks,
> Joe Frabosilio
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