Katrina destroys a major U.S. city and reeks havoc to the U.S. Economy. crude to $70, gas to $3, close to inverted yeild curve. All this was unable to bring down equities. In fact, the market is up since Katrina even though the cunt made an unexpected turn last minute. Well shit, what does it take to bring down the stock market?
Markets are staying up with the expectation that there won't be an interest rate hike this Sept. 20th due to the devastation. All it takes is a rate increase.
FYI: Just saw technical analyst Richard Morrish on CNBC Europe. His prediction is that the Dow will move 10%-20% in the next week or two. He was pressed by the interviewer if this is an up or down move to which he responded that he didn't really know, as the problem is that the markets are not trading logically at the moment. However, his bet is that the Dow will trade lower.
^ It's not just me then. I've noticed some 'strange activity' in ForEx regarding the USD. The Frantic buying spree during the afternoon and the midnight pump crew in the futures market, seem a little odd, too. IMHO
But long-term yields have been unresponsive -- even falling -- when the feds moved short-term rates. I have a hard time believing this is enough to counteract the damage Katrina had on a already weak economy. Plus, even if the fed were to pause it's rate hikes, why so much strength in the USD the days after Katrina. (The market has since corrected itself but the dollar still seems awfully strong).
from this week's Barrons cover... Let's Fire It Up! by Michael Santoli If history repeats, the U.S. stock market could reward investors with a solid year-end rally. After all, Wall Street's leading strategists held the identical view last year, and they were spot on with their predictions. The outlook for energy, financial and health-care stocks. A few encouraging words about 2006.
PPI & CPI are going to blow the cover off the ball. I will be hard for the Fed to stop raising rates. They may talk about pausing, which will have the same effect.
Bush is such a myopic thinker. Its always the short term for him. Whats going to make him look good in the short term. What do you think Bush and Greenspan talked about during their meeting Friday? I'm sure Bush was pushing Greenspan to NOT raise rates. And Greenspan said, Okay Mr. Bush. Greenspan is, after all, stepping down at the end of the year (~3 months longer). Folks are going to start getting concerned. The markets especially. I think this fear coupled with a worsening economy will push the markets WAY down. We may have a week of gains coming up, but its only a sucker rally based on an oversold condition over the last month.
markets dont fall with high short interest. Market exact maximum damange to maximum participants. Thus, since everyone KNOWS there is a big short interest, and short position has a negative bias (having to pay out dividends), and there are no long-term shorts (ie cause it has a losing bias), then all longs have to do is hold the market from going down and the short squeeze themselves taking the market higher. Markets can't fall on huge short interest for the alternate reason that on every pullback some will start to cover thus propping the market. The fact that the short interest has been growing yet the market has been going sideways is a bullish inidicator. I would say the most likely scenario is a short squeeze higher, failed uptrend attempt and then we sell off thus penalizing both longs + shorts. Reality doesn't matter. The bets do. Wtih all this bearish behavior and monster short interest, the shorts are essentially trapped, any of this news getting better (like a retracement of oil) will start a huge rally (however we dont know if its sustainable). Mainly remember that there ar elongs that stay long for 20 years at a time, there are no shorts that do this, thats why shorts have the time element against them. (Long side traders have the buy and hold crowd on their side). good luck.