Last time, a rate cut wasn't enough (remember the 24 hr delay?) to cause a rally and he pumped 11.7 billion dollars into the stock markets by giving the banks an unexpected transaction.
Undoubdtedly the economy is treading a fine line and we all have to take a view. I think it's perfectly possible for us to take opposing view points on the market and yet both be winners by using trading skills.
In difficult markets there is a case for going long and short to hedge against the general market direction though for now I'm having fun by going long again.
To feel pretty sh#te about the state of the markets.
To go through a repeat of the lows again....
What is important to remember is that money always finds somewhere to go. Through the last 6 months, the headlines have been techs, how many people have lost on TMT's etc. Yet in the meantime, the smart money has been in construction, retail and even mining. If you played things right, you could easilt be 50% up - even going long in a bear market. There is cycling of sectors, and its all about finding where to go next. Me - I'm 66% in cash, looking where to go next..as well as trying to work out how AIQ works!!
Well I may as well add my 10penneth,
As a total novice to the game,this website is an invaluable tool,as is the chatroom.
I watch the likes of riz and others backing up their words of wisdom with trades and actions most days.
The people who are in the position to trade full time have my utmost respect and admiration,for the simple reason that they "put their money where there mouth is".And the best of British to all.
As for the end of the bear market,I believe this is still sometime away!
I write on the day that MrG is scheduled to announce his latest prescription for the US economy.
It seems to me that the bulls have complete and utter belief in the brilliance of "the man" and they are full of confidence that a few points off the interest rates can halt the downturn in the US economy.
The fact remains that a large percentage of "US consumers" actually borrowed money to buy shares,I am amazed by this fact every time I see it written down,their portfolios have tanked but their loan repayments just carry on regardless!
This state of affairs will take more than a few interest rate cuts to rectify,IMHO
Just the view of a beginner (and 1 more post in the archives)
The reasons for my pessimism :
1. US rate cuts are pushing on string. Old economy faltering feeding through to lower orders for nes
2. Still too much world tech capacity shot term
3. UK/Europe demand faltering.. see Cap Gemini statement about falling Europena orderes in past few weeks for telecomms and financial staff.
4. Go to UK Invest CFD notes by Sadiq Mahir (sp?) and see what the hedge funds are shorting.. BT to 350 and Vod to 130 and Colt to.? 350? They are not always right but a good source of market thinking.
5. Long term downtrends in tech stocks are still intact and some (many) are still rated at PEs of 40+ - that's assuming 20% + profit growth every year.. many are giving warnings profits are falling..
6. Look at 6 month charts of Dow, SP500, NAS, FTSE100 and Techmark. If you think they have bottomed at these levels as a chartist I say it's possible (everything is) but the chart patterns suggest major falls ahead.
7. Economic uncertainty reigns.. and that means volatility, nervousness and scope for further panics..
8. There is no clear volume blow off but a gradual creeping down in the UK.. and it's summer. That suggests no clear bottom in sight.
9. Institutional buying. They hold approx 70% of all UK stocks.. Are they buying? Volumes say no.
My conclusion.. possible 10-20% falls to come.
I'm only short 1 stock at present Galen. Waiting for FOMC decision.. expect a rally for a week if 0.5% and then a selloff. If 0.25%, selloff and big falls at once..
This is on the back of only a 0.25% cut. 1.2% fall, just moving back into the green.
Techs are sick - tell us what we don't know.
However, there are more sectors than TMT's - some of which are reaching new highs. It is important to find strategies that work in all sectors and markets. It is important to avoid the bulletin board mentality of focusing on techs, until the downtrends are broke. There are a lot more companies out ther, attracting the smart money. We just have to spot them...
I'm now looking for a higher low to form on the main indices. There will be more punishment to come for tech stocks for the short/medium term and while they are good for range trading I doubt that we will see them rocket yet.
Meanwhile a higher low would help the ftse100 to get back above 6000 and trade in a range just above that 'til we're ready for the next move.
The fed isn't going to give in without a real fight - no matter what the charts say!
Here we go...the worst possible outcome (well at least for most commentators)...0.25 and not 0.50...and the us market didn't tank...is it not something to think about more seriously now?
As I keep saying the US is fully concentrated on Q4, they're trying to work out if a turn round may possibly start at the end of the year, whereas UK only sees Q2 and its profit warnings...
0.25 looks better, as it indicates that the Fed is not panicked about the state of economy, considering they didn't give a clue of possible intrameeting rate cuts, they sound more confident than when they announced the previous one...
Noone here saying a bullish trend has started, but I don't see further leg down either, we've seen the bottom, it's consolidation time..
For trading purposes it doesn't matter which way it goes...but for investing purposes it's stock picking time and this includes techs too in spite of many dogs out there, a good investor should be able to pick the resilient ones...
Thanks for contributing to this thread, for a while I was worried that we gave up discussing such main issues...looks like it's working again, no doubt it will shed light to our trades/investments as it did previously...
"Can't agree with any of you.
SP500/NAS and DJ formed double or treble tops. FTSE100 at critical support.
Last throw of bulls FOMC cut 0.5%..
Dow may rally to 10900, NAS will not top 2200
Then reality intervenes.. NAS to 1750, Dow 9500 and FTSE100 brelow 5300. "
look as if they are coming true.
My charts say FTSE100 below 5000 - soon.
Look at the FTSE100/250/350 and sector charts.. all turning down viciously. And lokk at the Nikkei 225.. poised to make a new multi-year low soon..As for the US , well economic reality and hope are meeting. Dow sub 9500 soon.
Not that these falls will last for ever. I'll start buying techs to hold (as opposed to trade) when real value exists: Techmark at 1100.
Mike, going back to what I said above, the value is not in techs at the moment - I no longer spend my time looking there.
What is concerning me most about the high-tech indices, is that as the Techmark is at record lows, the Nasdaq is still about 20% over its record lows early April. I cannot believe that even if there are no further warnings from UK listed companies (which I do not believe!), that should the Naz fall, the Techmark will rise. And on the basis of making lower lows, you would have to say that the bear trend has not - as I hoped and believed, been broken. My only grace is that apart from a small punt, I did not put any more money where my mouth was!! Thank god for exams.
Anyway back to above. Unless there are some big positive earning surprises in the US (don't hold your breath!), this could be a revisit of some difficult times. With such dissaffection in stocks post-marconi etc, the suffering could get worse - esp if people just ditch them.
Me - well, I am spending the time getting acquainted with AIQ, and looking forward to my holiday in a weeks time. I don't intend to trade before then.
Agreed with non techs.. but shorts in techs just now are like 1999 in reverse.. prices falling as quickly as they rose..
Agrre a lot more bad news to come on techs.. and on some old economy as well..
The sports betting arena and oil sectors havbe some good value/growth plays.. Sportech, Edinburgh Oil& Gss, Melrose etc..
Nasdaq +103 to 2,075
Dow +237 to 10,478
S&P 500 + 27 to 1208
As one analyst said it's best to play it day by day, but this one is certainly a big step in the right direction...market was desperate for a direction and Microsoft provided it...
Of course as the saying goes, one flower doesn't bring the spring, but it did add to the consolidation period and prevented April lows to be retested...
The question now is whether the rally will sustain, I personally don't think it's the start of a long-term bull market yet, but as I keep saying the worst is over for the US and they are determined to keep it going above april lows till they get clearer signal of positive earnings and it's not all doom and gloom in the US as it is in the UK...
It's still too early to start long term investing in the market, but it's also too risky to play it like the market is set to go all the way down...we may get scrambled to cover short positions...
So one way or another let's not get carried away and keep being more open-minded, otherwise it's easy to get burnt either way...
Nasdaq +9 to 2,084.
Dow +60 to 10,539
S&P 500 +7.54 to 1,215
Thus Dow gained 4 percent on the week, Nasdaq 3.9 percent and the S&P 500 gained 2.1 percent...
Impressive on a week that Charles Payne, president of Wall Street Strategies described as: "The key word coming into the week was fear and that fear didn't turn to panic so the key word going out of the week is hope..." Therefore he says, "So far I'm encouraged."
In fact it's still bounces both up and down till the consolidation ends to start a sustained uptrend...this is obvious seeing everybody piling in when the market moves one way or another...still lack of conviction
In the day's economic data, wholesale prices fell in the United States in June while retail sales rose, the government said Friday, indicating inflation pressures are low and consumer spending is surviving in the world's largest economy...
the University of Michigan's initial July report on consumer sentiment came in slightly stronger than expected at 93.7 percent. Expectations by analysts polled by Briefing.com had been for 93.5 percent, up from the previous reading of 92.6. (cnnfn)
Looks like it's neither all doom and gloom as the majority of UK investors/traders started to feel nor all pinky...we've got to be able to cope with bouncy markets or stay on the sidelines till an established trend starts...
After two straight days of gains, US investors getting nervous on this week's earnings rush.. 38 percent of S&P 500 companies will unveil their results...
They're getting nervous both ways, missing out on buying on the dips on the one hand and earnings rush on the other hand, thus turning the market movement into a see-saw action...
Jay Suskind, director of trading at Ryan Beck & Co.
"We're heading south without much fanfare. I don't get the sense that there's lots of momentum behind either upside or downside moves in the market... Everybody is waiting for news, whether it's earnings or economic reports." said Jay Suskind, director of trading at Ryan Beck & Co.
On top of everything else they are going to hear the Fed Chief Alan Greenspan's semi-annual testimony on the state of the U.S. economy before Congress on Wednesday...
Well as I said in the chatroom today, this market is just good to improve skills and nerves so long as you don't hang on to losses
Apart from profit numbers, on Wednesday, Alan Greenspan testifies about the economy before the House Financial Services Committee...no doubt there will be questions to get clues as to whether the Fed will cut again next month...
"He needs to instill some confidence in the marketplace," said Roy Blumberg, chief equity strategist at Sterne Agee & Leach...
"The bull camp, for example, is unlikely to get indications that substantially more rate cuts lie ahead. On the other hand, Greenspan is unlikely to indicate that the Fed is finished cutting rate cuts. At the end of the day, the markets are likely to walk away with the conclusion that the Fed is nearly done with its rate cuts but that they haven't closed the door for more, if necessary," said Tony Crescenzi, chief bond strategist at Miller, Tabak & Co...
With Intel beating the street it looks like this summer is going to be two steps forward one step back for the US markets, the problem is that we still can't say this for the UK markets...
In the mean time why not try and make use of the bounces keeping in mind that shares don't go up or down in a straight line and that we're not in a sustained uptrend yet...
As for me I'd like to see each day as it comes, keeping an open mind on the market sentiment and momentum and go with it for the time being.
Looks like shorting is not as much fun as it used to be any more...as the Hennessee Hedge Fund Advisory Group says:
"I haven't seen anything like it in the 30 years I've been in the market," says Hennessee's Charles Gradante. "Funds don't know which way the market is going. Some are sitting on 40% cash. We're stuck in a trading range, with repeated rallies and declines. Many stocks have been rallying on the dips, forcing managers to cover their shorts. They're getting whipsawed."
Another sign to consider on deciding whether the bear market has come to an end...
Here is the link for the full article which makes interesting reading regarding big short sellers..
It will also be interesting to see what effect this has on the profits of IGI and the like.
I suspect that when the consensus is that there is a new bull market the average punter will go back to buying shares in their peps and isas leaving only the ardent trader using sophisticated instruments and spread bets.