Post by Savant on Jul 19, 2004 4:22:15 GMT -5
As if to further illustrate the need for our planned: "Real Time Advisory Service" wherein we can bring clients up to the minute information, due to technical problems we were unable to post at this location, but were fortunate to alert our clients ahead of the market's open... The contents of which were as follows:
Economic and Market Commentary
Still Probing for a Bottom... Published 09:15 AM EDT Thursday July 15 2004
The market has behaved in a very mixed fashion over recent days. We proposed Monday that the market would attempt to put in a bottom early in the week, either Monday or Tuesday and then as we already reported, we nailed the first bottom around 2 PM EDT Monday afternoon in what really turned out to be a reasonable attempt at a broad based rally that was in part inspired by a sudden and dramatic plunge in energy prices across the board. In our follow-up report, we suggested the market needed confirmation of this Monday bottom before it could really gain some serious traction and begin moving higher in a more convincing way. We also posed the longer term idea that the market might even trundle sideways going into the Democratic Convention towards the end of the month that then might create more favorable conditions for a stronger rally into the Republican Convention.
Tuesday, turned out be a sideways consolidation for most of the day, that started to weaken near the close as it looked set to retest Monday’s lows in some way to re-test that low as we indicated. We found out why the market weakened into the close Tuesday, when Intel INTC, announced great results that apparently were not impressive enough because of growing inventories and a more subdued albeit still reasonable growth rate ahead. Result: Intel plunged about 10% and lost about 18 Billion in market cap in the process and so the market came in fairly weak Wednesday morning, but not that weak given the less than stellar news on Intel. This turned out to be the retest attempt we were looking for and again, we were fortunate enough to alert some clients to this ahead of time although the market took off almost from the opening Bell that resulted in a near 100 point turnaround in the Dow that became unsustainable really for two reasons: The lack of any rally and continued decline throughout the day in Intel disappointed investors and secondly the Oil complex exploded back to new highs in some sectors and clearly this has been holding the market back from being able to mount the kind of sustainable rebound we would like to see.
On the other hand there is inherent strength underlying the markets, because in spite of a dismal performance from Intel and to a lesser extent from that other tech giant IBM, the market still managed to rally quite impressively, before succumbing to further selloff and short term profit taking. You may recall, last week, how we mentioned that a recent feature of many stocks were the short term rallies being hammered back in short order in the main as investors take anything they can for now. Given the above, once Intel and IBM show signs of stabilization, the market might be ready to mount a more convincing rally. We should look for that possibility to unfold any time going forward, potentially as soon as today, especially this afternoon. Not all is all that bleak a la Intel however: JNPR Juniper Networks delivered blistering results and the issue rose sharply in overnight and early Wednesday trading. Many mid-cap and specialist defense issues have been performing strongly and the S&P 600 recently hit new all-time highs, so the undertones for a continuing strong market clearly exist beneath the surface. We said this would be a buy dips market all year and so far it has been..
On the interest rate front, many market pundits appear to have been greatly confused by recent developments, because immediately following the Fed’s recent rate hike, they mostly declared this would be a walk in the park, quoting all kinds of historical statistics about how high the market has moved following rate hikes, invariable led by the tech sector. Well so far, the exact opposite has occurred, somewhat embarrassing our revered Wall St soothsayers. There’s an old saying: What everyone knows isn’t worth knowing and when these ideas or the so called conventional wisdom is widely telegraphed it invariably doesn’t pan out quite as expected.
Every time investors or soothsayers for that matter think they’ve found the keys to the market the market oftentime changes the locks!
What went wrong this time around, so far anyway? Fed Chairman Greenspan’s déjà vu panic of 2000 may be the answer: Whoops I did it again… I’m not that innocent his time around again: But still remains guilty and culpable of causing 7 trillion in the worst market cap losses in history post 2000. Still, did a masterful job turning the market and economy around last year, but for now the jury is out.
No sooner does he raise rates, un-necessarily in our view for reasons already widely expressed in our recent Special Report: “Golden Era Rate Hike Threat”, the economy begins to soften and employment creation is halved. We warned ahead of time, we are not yet out of the woods “safe” and that the economy is still vulnerable until we see another six months at least of 200,000 plus job creation.
Trading Ideas and Updates
Our December Cotton trade produced approximately $600 for 24 hours and 15 minutes of work and the Fluid Milk trade actually managed a bit more at $880 for about 20 hours of market exposure.
Since then, our comments regarding the strength of Orange Juice continued to be borne out as it soared to new short term highs, building upon a spectacular rally began about six weeks ago. And Cocoa has continued to soar along with Sugar’s continued strength.
Cover all stock trading short ideas recently promulgated at market at today’s open.
Wheat is beginning to look interesting from the long side and September Corn can be bought at 247 on a stop.
The Energy Sector may be close to giving an important sell signal of a higher quality than the last two high points that resulted in sell offs. We’ll take a shot at selling August Crude, Gas & Heating Oil at 10:30 at the market and August Natural Gas at 5.975 stop.
Remember...What we said Monday was: What has to happen today and tomorrow is for the stock market to hold these gains or survive a retest of some sort with success. So far the market is trying very hard against difficult odds and so far is almost succeeding.
Have a great Thursday
Trade Well…<br>
Savant
An early fall in Energy prices precipitated the need to send out a special Energy Sector Update at 10L50 that morning as follows:
Energy Sector Update... Published 09:15 AM EDT Thursday July 15 2004
Since we are up about $1550 for half an hours work in the August Natural Gas contract, I am electing to take the $$ and place a protective stop on the August Natural Gas to buy at 5.85 stop. The other positions although already profitable to the tune of a few hundred dollars or so are by no means safe as yet...So cover these as well at the market.
Meats are weak this morning and could be the start of a downtrend.
Have a great Morning
Trade Well…<br>
Savant
Economic and Market Commentary
Still Probing for a Bottom... Published 09:15 AM EDT Thursday July 15 2004
The market has behaved in a very mixed fashion over recent days. We proposed Monday that the market would attempt to put in a bottom early in the week, either Monday or Tuesday and then as we already reported, we nailed the first bottom around 2 PM EDT Monday afternoon in what really turned out to be a reasonable attempt at a broad based rally that was in part inspired by a sudden and dramatic plunge in energy prices across the board. In our follow-up report, we suggested the market needed confirmation of this Monday bottom before it could really gain some serious traction and begin moving higher in a more convincing way. We also posed the longer term idea that the market might even trundle sideways going into the Democratic Convention towards the end of the month that then might create more favorable conditions for a stronger rally into the Republican Convention.
Tuesday, turned out be a sideways consolidation for most of the day, that started to weaken near the close as it looked set to retest Monday’s lows in some way to re-test that low as we indicated. We found out why the market weakened into the close Tuesday, when Intel INTC, announced great results that apparently were not impressive enough because of growing inventories and a more subdued albeit still reasonable growth rate ahead. Result: Intel plunged about 10% and lost about 18 Billion in market cap in the process and so the market came in fairly weak Wednesday morning, but not that weak given the less than stellar news on Intel. This turned out to be the retest attempt we were looking for and again, we were fortunate enough to alert some clients to this ahead of time although the market took off almost from the opening Bell that resulted in a near 100 point turnaround in the Dow that became unsustainable really for two reasons: The lack of any rally and continued decline throughout the day in Intel disappointed investors and secondly the Oil complex exploded back to new highs in some sectors and clearly this has been holding the market back from being able to mount the kind of sustainable rebound we would like to see.
On the other hand there is inherent strength underlying the markets, because in spite of a dismal performance from Intel and to a lesser extent from that other tech giant IBM, the market still managed to rally quite impressively, before succumbing to further selloff and short term profit taking. You may recall, last week, how we mentioned that a recent feature of many stocks were the short term rallies being hammered back in short order in the main as investors take anything they can for now. Given the above, once Intel and IBM show signs of stabilization, the market might be ready to mount a more convincing rally. We should look for that possibility to unfold any time going forward, potentially as soon as today, especially this afternoon. Not all is all that bleak a la Intel however: JNPR Juniper Networks delivered blistering results and the issue rose sharply in overnight and early Wednesday trading. Many mid-cap and specialist defense issues have been performing strongly and the S&P 600 recently hit new all-time highs, so the undertones for a continuing strong market clearly exist beneath the surface. We said this would be a buy dips market all year and so far it has been..
On the interest rate front, many market pundits appear to have been greatly confused by recent developments, because immediately following the Fed’s recent rate hike, they mostly declared this would be a walk in the park, quoting all kinds of historical statistics about how high the market has moved following rate hikes, invariable led by the tech sector. Well so far, the exact opposite has occurred, somewhat embarrassing our revered Wall St soothsayers. There’s an old saying: What everyone knows isn’t worth knowing and when these ideas or the so called conventional wisdom is widely telegraphed it invariably doesn’t pan out quite as expected.
Every time investors or soothsayers for that matter think they’ve found the keys to the market the market oftentime changes the locks!
What went wrong this time around, so far anyway? Fed Chairman Greenspan’s déjà vu panic of 2000 may be the answer: Whoops I did it again… I’m not that innocent his time around again: But still remains guilty and culpable of causing 7 trillion in the worst market cap losses in history post 2000. Still, did a masterful job turning the market and economy around last year, but for now the jury is out.
No sooner does he raise rates, un-necessarily in our view for reasons already widely expressed in our recent Special Report: “Golden Era Rate Hike Threat”, the economy begins to soften and employment creation is halved. We warned ahead of time, we are not yet out of the woods “safe” and that the economy is still vulnerable until we see another six months at least of 200,000 plus job creation.
Trading Ideas and Updates
Our December Cotton trade produced approximately $600 for 24 hours and 15 minutes of work and the Fluid Milk trade actually managed a bit more at $880 for about 20 hours of market exposure.
Since then, our comments regarding the strength of Orange Juice continued to be borne out as it soared to new short term highs, building upon a spectacular rally began about six weeks ago. And Cocoa has continued to soar along with Sugar’s continued strength.
Cover all stock trading short ideas recently promulgated at market at today’s open.
Wheat is beginning to look interesting from the long side and September Corn can be bought at 247 on a stop.
The Energy Sector may be close to giving an important sell signal of a higher quality than the last two high points that resulted in sell offs. We’ll take a shot at selling August Crude, Gas & Heating Oil at 10:30 at the market and August Natural Gas at 5.975 stop.
Remember...What we said Monday was: What has to happen today and tomorrow is for the stock market to hold these gains or survive a retest of some sort with success. So far the market is trying very hard against difficult odds and so far is almost succeeding.
Have a great Thursday
Trade Well…<br>
Savant
An early fall in Energy prices precipitated the need to send out a special Energy Sector Update at 10L50 that morning as follows:
Energy Sector Update... Published 09:15 AM EDT Thursday July 15 2004
Since we are up about $1550 for half an hours work in the August Natural Gas contract, I am electing to take the $$ and place a protective stop on the August Natural Gas to buy at 5.85 stop. The other positions although already profitable to the tune of a few hundred dollars or so are by no means safe as yet...So cover these as well at the market.
Meats are weak this morning and could be the start of a downtrend.
Have a great Morning
Trade Well…<br>
Savant