Stocks are Going to EXPLODE Higher

Discussion in 'Trading' started by super-ego, Sep 3, 2005.

  1. duard


    Funds are fully invested at present.

    I agree. We MAY rally into 2006 but all is not rosy in my crystal ball.
    #41     Sep 5, 2005
  2. Ok, let's take a look at fundamentals, since you don't know how to use T/A to gauge trends.

    I am short term bearish.

    GLOBAL MARKETS-Markets worry Katrina may hit U.S. growth
    Mon Sep 5, 2005 08:49 AM ET
    By Lincoln Feast

    LONDON, Sept 5 (Reuters) - Worries that Hurricane Katrina will take a bite out of U.S. growth boosted bonds and sent the dollar to multi-month lows on Monday as markets grew more confident that U.S. interest rate rises are coming to an end.

    The scale of the destruction caused by Katrina, and the disruption it wrought on the U.S. energy industry in particular, has led some economists to trim their U.S. growth forecasts.

    "Katrina's central macroeconomic impact results from the damage to U.S. refinery capacity, damage that has sent gasoline and other energy prices soaring," JPMorgan said as it cut its second-half GDP growth forecast to 3.25 percent from 4 percent.

    The U.S. oil industry is still struggling to recover from Katrina, which flooded refineries, cut power supplies to pipelines and knocked down oil rigs and platforms.

    The disruption sent crude oil to a record high of $70.85 a barrel last week and pushed U.S. retail gasoline prices above $3 a gallon in many places.

    "Such a rapid escalation in prices is sure to hit confidence and real spending hard," Paul Ashworth of Capital Economics told clients in a research note.


    The dollar sank across the board on expectations that the spike in fuel prices will prompt the Federal Reserve to curtail the interest rate tightening cycle which has underpinned demand for the currency since March.

    "People are unwinding growth expectations and interest rate expectations," said Naeem Wahid, currency strategist at HBOS Treasury Services.

    "The market was pricing in Fed funds rate at 4.25 percent by the year end at one point, now it has been pushed back to 3.75 percent. The dollar will struggle in this environment."

    The dollar had already been under pressure after recent data showed growth was not as strong as expected, focusing attention on structural problems within the U.S. economy -- notably its massive current account deficit.

    Against a basket of major currencies, the dollar (=USD: Quote, Profile, Research) hit its lowest since May 18, racking up a 4-month low against sterling , a 2-1/2 month low against the yen and a 3-1/2 month low against the Swiss franc.

    The euro was steady against the dollar, trading at around $1.2540.

    Trade was thin with U.S. markets closed for Labor Day.

    Prospects that U.S. interest rates will not rise much above their current 3.5 percent supported government bonds.

    Yields on euro zone government bonds sank to new lows on the possibility that the Federal Reserve might not raise rates at its Sept. 20 meeting from the current 3.5 percent and as data showed growth in the euro zone's service sector slowing.

    The NTC euro zone services purchasing managers' survey posted a reading of 53.3 for August, below the 53.5 seen the previous month but above the 50 mark between growth and contraction.

    "The consensus PMI forecast was for a small decline and that's what we got, so it was a neutral outcome in the end," said Ken Wattret, chief euro zone market economist BNP Paribas.

    "There's a feeling that high oil prices combined with damage from Hurricane Katrina will hurt the U.S. economy, bringing the Fed's tightening cycle to a swift end. This is boosting demand for bonds."

    Benchmark 10-year yields (EU10YT=RR: Quote, Profile, Research) plumbed an all-time low of 3.039 percent and last traded about 3.05 percent, while comparable U.S. bonds (US10YT=RR: Quote, Profile, Research) yielded 4.04 percent.


    Oil prices fell on Monday, extending Friday's drop, after the International Energy Agency confirmed late on Friday its 26 members would release 60 million barrels to help ease the U.S. fuel supply crises.

    London Brent crude oil (LCOc1: Quote, Profile, Research) was off $1.33 at $64.72 a barrel at 1244 GMT, back below the level seen before Katrina disrupted U.S. Gulf oil production and refining operations.

    Stocks rose in Europe and in Asia as oil fell, with Japan's Nikkei closing at a four-year high and the FTSEurofirst 300 up 0.4 percent.

    © Reuters 2005. All Rights Reserved.
    #42     Sep 5, 2005
  3. #44     Sep 5, 2005
  4. Have you considered the long stocks/long oil position?
    #45     Sep 6, 2005
  5. Good call, super-ego. Nice rally today.

    The weekly chart of the SP500 is solidly bullish, with a very sustainable slow grind upward. Note how On Balance Volume has made new highs, suggesting a bullish divergence compared to the early 2001 high at 1308. Stochastics are overbought, which is good, you want STO to stay pegged high as that is the sign of an uptrend. I think the SP500 will try to retest the old 1308 high in a matter of months.

    #46     Sep 6, 2005