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A lot has been made of historical 3 month rallies following Fed rate cuts,
including an analysis the other day on Squawk Box which purported to show
that historically, such rate cuts led to major 3 month rallies in 14 out of
15 occurrences during the past 50 years. Now, that's impressive, but for
some
reason I'm dubious.
The hallmark of this decline has been PE contraction from historically
high (actually irrationally exuberant comes to mind) levels. Has anyone
performed a study which considers PE contraction or is the historical
precedence of contraction from such high levels non-existent?
Earl
----- Original Message -----
From: "Gitanshu Buch" <onwingsofeagles@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Tuesday, January 09, 2001 9:26 AM
Subject: Re: [RT] fed is finnally VERY acomodating in m3
> Here's a lookback to risk/reward in SPX after the first fed ease.
>
> Gitanshu
>
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