Nasdaq down for the seventh consecutive Friday...

[Riz]

Still uncertainty in the US…economic data did not help much to give enough clues as to how aggressive the Federal Reserve might be in cutting interest rates…add warnings from several tech stocks and the triple witching (for those who might not be familiar with this, it is the quarterly expiration of futures, index options and individual stock options happening the same day and causing a lot of volatility) to this and you won’t be blaming those starting another sell-off in technology…that’s for innocent traders/investors of course…for the sinisters behind both the hype and the following crash it is another story of course…anyway going back to the Nasdaq..

It tumbled -50 more than 2%, to 1,890 forming a fresh low for the year and going below 1,900 for the first time since Nov. 19, 1998… volume was over 2 billions as losers beat winners by 26 to 10…

All tech sectors had heady losses… with Internet, chip and hardware being the leaders…

Nasdaq did try to bounce a few times, failing every and each time… pathetic bounces as an analyst put it…in these oversold conditions.

So what’s going on here? Was it because the economic news was bad?

Doesn’t really look so, the Producer Price Index measuring prices at the wholesale level rose just 0.1% and that was in line with Wall Street forecasts…good news with regard to inflation…

Only that’s where they start the problem thinking that might cause the Fed to be less aggressive on the rate cuts…

Pathetic isn’t it? If the report had suggested that there was a high risk of inflation as well, would we have a rally here? I doubt that…then we’d probably had more tumbles with shorters saying the economy is in more trouble than we thought…

Just as Prudential's Piskorowski puts it, "We just can't win with economic data… You see the slight uptick in consumer sentiment which bodes well for the economy but runs counter to the crew that was looking for a 75 basis point cut from the Fed, so there was some disappointment there."

All expectations are for the Fed to cut rates by at least 0.5 when it meets Tuesday…not that we don’t here those of 0.75 here and there…

"The market is expecting a 50 basis-point-cut but is hoping it'll get 75 basis points. The higher consumer sentiment number released Friday makes a bigger move less likely," said Peter Boockvar, equity strategist at Miller Tabak & Co.

Well that we’ll find out next week…looks like 50 points is for sure, 75 points is doubtful however…

The only problem is that even if the Fed does reduce the rate cuts as expected, any rally or bounces the market gets afterwards won’t go far…the best can be what we witnessed in the beginning of January in my opinion…

The real turn round or in other words a sustained uptrend can only start when investors can see the effects of the rate cuts and when the companies start reporting improvements…

Still such a rally or bounces could give the market some fresh breath till the real turn round starts…

On the other hand this whole thing has become more and more psychological and sentimental, and as it’s widely believed that there won’t be another huge leg on the downside for Nasdaq, any short-term rally can be quite sharp..so we’d better watch out and make the most of it while it lasts…

Once again cash is the King as Mark Donahoe, institutional equity sales trader with U.S. Bancorp Piper Jaffray puts it:

"It's been brutal… It's more of the same but tech is in its own world right now and it's a world of hurt. Cash is king right now."

So let’s wish a nice and restful week end for all of us here…hoping we’re the less hurt and ready and well-prepared for a turn round…

Riz

 

[ChartMan]

I vote Riz takes Greenspans Job.......

 

[titus-uk]

Here here!

 

[Riz]

hehe...

I knew these posts would pay one day...

Riz

 

[Riz]

In case you're wondering what's the Fed going to do with the rate cuts next week...here is some analysts' views from cnn...

Riz

Wall St. tunes into the Fed
Investors keenly wait to hear what the Fed says about interest rates
By Staff Writer Catherine Tymkiw
March 18, 2001: 7:00 a.m. ET


NEW YORK (CNNfn) - Investors will be watching the Federal Reserve very closely this week for signs from the central bank that it will be aggressive about cutting short-term interest rates.

Most expectations are for the Federal Open Market Committee (FOMC), the Fed's policy-making body, to cut rates by at least a half percentage point when it meets on Tuesday. So investors will be dissecting the rhetoric of the Fed's statement for insights into the FOMC's thinking.

"Most of the attention will be riveted to the Fed meeting on [March] 20th," said Alan Ackerman, senior vice president of Fahnestock & Co. "We are no longer a U.S. market isolated from the rest of the world – foreign markets react to what happens here. I think the U.S. has to take the lead here in aggressively cutting interest rates."

There has been some talk on Wall Street that the Fed could cut rates by three-quarters of a percentage point. And analysts say that would inject some life into the current dour market.

"We believe if the Fed does not cut by 75 basis points, there is a risk the market would be disappointed," Bruce Steinberg, chief economist with Merrill Lynch, wrote in a note to clients. "If the Fed does cut by 75 basis points, we do not think that the selling climax would continue past that point."

U.S. stocks bounced wildly last week as investors neared panic about the pace of the economic slowdown as more and more leading companies issued negative news, from revenue warnings to job reductions.

Analysts are now hoping the Federal Reserve will cut short-term interest rates dramatically.

"My feeling is the Fed hasn't clearly indicated that it's fighting a slower economy rather than inflation," said Fahnestock's Ackerman. "Economists and individual investors would like to see the Fed cut rates by 75 basis points and I do believe that would take some of the pressure off the consumer."

The FOMC slashed interest rates by a half point at its last meeting, Jan. 30-31. The cut came less than a month after the Fed surprised the market with a half-point rate cut Jan. 3.

"What I'm expecting and hoping is they'll continue the rhetoric that the economy looks better in January and February than it did in December," said Art Hogan, chief market strategist with Jefferies & Co. "We need it psychologically and those guys (FOMC) can look around the corner – it adds credibility to the fact that this economy will turn around."

The two cuts came after six interest-rate hikes from June 1999 through May 2000 as the Fed aimed to temper the surging economy and ward off inflation.

Wall Street Strategies head analyst Charles Payne said he expects a half-percentage-point cut from the Fed next week. "I'm hoping that it's accompanied with encouraging language."

 

[shelman]

If you're offered Greenies job Riz, decline it. From what i've been reading Stateside there's a lot of very disgruntled investors...pension holders... you could end up wearing ceement boots talking to the fishes.
Hehe

 

[ChartMan]

Then he coud be our over-seas, sorry Under-seas correspondant....