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Don't overlook inflation. It is the lurking factor that will kill this market
once it is recognized and acknowledged by the market. Corporations have two
courses of action, raise prices to increase profits, or take their losses to
bankruptcy court. You can only cut costs so much and reduce labor so much then
it starts to impact you at the bottom line also. There has been a distinction
made by the government that the cost of living and inflation are two different
animals. I believe that if it costs me more to live every year then that is
inflation. Wheat is low but bread costs more. Cattle prices a down or in the
mid range yet meat costs are up. Where are lumber prices and the cost of
homes? Health care costs are out of control and if you need medications or
prescription drugs you might need to take out a home equity loan, if you can
afford one. Hurrah, gas prices are dropping, but from where? Here they are
dropping from $2.50 a gallon. What happened to the screams that occurred when
gas jumped to a dollar? Those in the east who use either heating oil or natural
gas, look out this winter, you could really understand about the difference
between the cost of living and the inflation rate if consumer prices don't drop
commensurate with the futures prices. They haven't in the gas market. The real
impact will hit when the dollar starts to fall. Take a good look at our balance
of payments to get a general idea of where we could be heading. No matter what
the economic condition there are stocks that will rally because of it and those
that will crash because of it. So I always look both ways before I enter the
markets. have a good week end.
Earl Adamy wrote:
> Norman, I think you have it pretty well covered. Only addition I would make
> is that the daily wave structure from the April low suggests the possibility
> that the rally into the May high was a w.1 and this decline is a w.2,
> setting up the bullish case for a strong rally i.e. w.3. I am rather dubious
> regarding this scenario and will believe it if and when we take out the May
> high. Still I do think we could get a pop here ... AGet is showing strong
> time clustering for a possible high in late July so I doubt that any rally
> is sustainable ... more likely an ABC correction and resumption of trend
> down.
>
> Overall, things are a bit murky regarding the price structure in the
> equities market but on the whole the economic picture looks negative when
> one attempts to peer beyond the latest economic release:
>
> Positive
> Low short term interest rates
> Expansion of money supply
> Ingenuity and creativity
> Negative
> Corporate earnings fattened by pension and option gimmicks
> Dividends remain very low
> High levels of corporate debt
> High levels of consumer debt
> Extreme high valuations of US stock indexes relative to earnings
> Extreme high valuation of US$
> Extreme reliance on service sector
> Extreme reliance on imports for manufactured goods
>
> Under the circumstances, investors will likely find reward by remaining
> defensive with a good measure of bonds. Unfortunately, the wave structure in
> bonds, looks rather weak suggesting the bull market in bonds is over and
> higher rates lie ahead ... major economic recovery or strong inflation.
> Since I don't see a major economic recovery in the immediate future and
> don't see further significant rise in inflation, I am assuming that this is
> one of those times when the wave structure is providing bad information.
>
> Earl
>
> ----- Original Message -----
> From: "Norman Winski" <nwinski@xxxxxxxxxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>; <gannsghost@xxxxxxxxxxxxxxx>;
> <get_traders@xxxxxxxxxxxxxxx>; <astrofinance@xxxxxxxxxxxxxxx>
> Sent: Friday, July 06, 2001 10:34 PM
> Subject: [RT] S&P Moment of Truth
>
> I see some important indicators converging next week for a possible change
> in trend for the
> US Stock Market via the S&P 500.
>
> 1.Jupiter will change signs which it only does every 11 months when it
> enters Cancer on 7/12.
> 2. S&P cash 1169 is a .618 retracement of the March to May rally. 1169 = 29
> Gemini which is where Jupiter will be until it reaches zero Cancer (90
> degrees = 1170) on 7/12.
> 3. Jupiter in Cancer should be friendly to the US, born on the 4th of July
> and with several Crab planets.
> 4. My sentiment indicator, as of Friday's close, entered bullish territory
> for the first time in several weeks, indicating the probability for a low in
> 1-2 trading days.
> 5. Even given the bearish case, if we stop at 1169 area, I can see five
> waves down and should at least get a very good bounce. Please see chart
> below.
> 6. If SPX goes much more than $5 under 1169, time to throw in the bull
> horns, and go back to the barn. On the other hand, I have cycles indicating
> that the Greenpan bail out should soon start having a positive effect on the
> US economy and markets until late summer.
> 7. Bottomline, I see the next few trading days as a "do or die" situation
> for the S&P 500 and probabaly the US stock market.
>
> Cheers,
>
> Norman Winski
>
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