Brigitte
15.12.2000, 13:02
* * * *
12/14/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
TONIGHT:
- Further market selling brings cries of 'Fed, help us!'
- Warnings fly, and unlike last week, the market needs a dose of Prozac to
handle it.
- Oil prices slide along with producer prices; good news for the economy.
- Lots of calls that the market is oversold, but there may not be much
upside before the FOMC meeting on Tuesday.
- Subscriber Questions
- Team Trades
Wednesday's warning shot was for real.
Last night we were concerned about the higher volume selling indicating
more bad news ahead. It is hard to fight with the numbers the market
shows us. The selling came again today, growing as the session wore on
just as it did Wednesday. Volume was lower indicating that there was not
wholesale dumping, but the point losses were no less painful. More
warnings before the open (JPM) and then after the close (MSFT) were and
are hammering the market.
Last week and early this week the market was able to handle bad news.
Stocks that were warning were not being shot; indeed, some such as INTC
even rose following the news. That was not the case today as JPM was
hammered. MSFT is being hammered after hours along with many tech stocks.
This in spite of good earnings by ORCL, and outstanding earnings once
again posted by ADBE. Those two are higher after hours, but they really
were whacked during the session; the modest recovery after hours has not
come close to erasing the day's deficit. Nasdaq futures are down 57
points after hours, and unless something happens between now and tomorrow
morning, we can expect a down open that will blast through the gap up
point at 2700 and test 2600. That would officially end the rally attempt
that started 8 sessions ago even with the confirmation we had. Soothing
words from Greenspan and finality to the national election could do the
trick. Seems that any change in market character is in hibernation for
now until the Fed takes real action and not just provide lip service to
the economy.
Action speaks louder than words.
Indeed, toward the end of the session today we heard on several financial
stations the plea to the Fed for help. "Have to have a rate cut." "It's
all in the Fed's hands." It took these characters long enough to join the
party, but it also took them well after the fact to join in the call for
no more rate hikes. The fact that the market has continued to tank in
spite of Greenspan's pep talk should, we repeat should, lead Greenspan and
his band of merry men to realize that action, not words, will be the
remedy to a tanking market, flagging consumer confidence, declining retail
sales, job insecurity, and the growing fear of recession. Hear the latest
poll? Those business leaders anticipating a recession in 2001 grew to 50%
from just 30% back in October.
THE ECONOMY
Will all of the pleading and economic slowing be enough to get the FOMC
(Frequently Orchestrating Market Crashes) to act and not just talk? The
clamor for a rate cut has gone beyond financial shows to the talk show
circuit as the public awakens to the thought that it is the economy,
stupid, and it is not in very good shape. Moreover, the protracted
political battle has diverted resources from the problem and exacerbated
the situation by claims that the new administration won't be able to take
the necessary steps to create an environment favorable to recovery, i.e.,
meaningful tax cuts. There is talk of the end of the death tax and the
marriage penalty, but that won't put that much money back into the economy
in a meaningful way. Are you listening Mr. Greenspan? Consumers were not
buying for the holidays before, and the further talk of the 'gridlock' in
D.C. that won't allow the administration to reverse the path you have put
us on is making things even worse. Combined with a trashed stock market,
there is little hope that the consumer will spend us out of this mess.
As for the economic reports today, they were labeled 'mixed,' but they
were anything but that. The PPI was below expectations, coming in at a
0.1% overall (in line with expectations) and flat for the core (0.1%
increase expected). That is down from October's 0.4% increase and is
further proof that there is no inflation in the economy. With oil prices
dropping even further today, the threat of inflation led by rising oil
prices (though as we said before, cartel action leading to increased
prices is not inflation at all) further diminishes. Not even some oil
drum rattling by OPEC about cutting production could prop up oil prices
today as more and more the market discounts a coming recession in all
commodity prices.
Jobless claims were called the 'mixed' part of the economic news for the
day as they came in at 320,000 versus an expected 355,000 claims. Last
month was 352,000 new claims. That had some saying that the lower numbers
put a damper on Fed action; well, this is the time of year when stores
should be straining to hire, but we see continued claims well above that
300,000 level that the jobless claims was below most of the year. We hear
of layoffs by IP, GM and others, and we know there are more to come. The
four-week moving average barely budged, coming in at 343,250 versus last
week's 345,250. The number of jobs being lost is growing.
A rate cut is needed.
The economy is showing the signs of the consumer confidence crisis: tanked
stock market, no holiday spending, no car buying, no durable goods
purchases. Now there is real concern about jobs in the new year;
Greenspan noted this back in October. Everything is already in place for
a rate cut, and if the Fed waits until the end of July, the tide will have
carried things further out to sea, making it harder to bring them back
with rate cuts. At a minimum it will take longer for any rate cuts to
take effect. Most say there will be no rate cut; perhaps we are being way
too optimistic. After all, the Fed did not even change its bias last
meeting and was scorned for not doing so. We have been reading the
economy for over a year and it has consistently showed us the slowdown was
faster and farther than most thought. We only hope that the Fed is
looking at the same tea leaves and makes the decision to help get the
country back to thinking about good times with enthusiasm. That is one
way to heal any perceived division in the country: get people excited
about the future once again, not anxious.
THE MARKETS
More selling, but on lighter volume. That does not mean the market will
recover tomorrow. To the contrary we have to deal with the MSFT earnings
warning that looks to be tanking the market after hours. Many said today
that the market was way oversold, but it will remain that way unless
investors feel better about the future. If it holds at 2600 it could
bounce up for another rally. If it bounces but fails to hold and turns
back at resistance, it will take the Fed to bring it back to life. That
is a lifeline not many are expecting to get, but if we don't get it there
is nothing to drive the markets higher other than another reflex bounce.
Overall market stats:
VIX: 28.27; +1.40. Volatility moved higher, but not sharply so on
today's selling. As we noted last night, of late it has been needing a
reading of 34 or so intraday to spark a turn in the market. We may get it
tomorrow with the MSFT warning, but the selling thus far after hours,
while strong, does not appear that devastating. Perhaps selling both
Friday and Monday before the Fed meeting will drive it to those levels.
Put/Call ratio: 0.97; +0.26. We get this from the CBOE each day, and we
have to admit the huge rise in the ratio makes us wonder if the data is
correct. If it is, this indicator is at the threshold of showing us a
turn; when the r
12/14/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
TONIGHT:
- Further market selling brings cries of 'Fed, help us!'
- Warnings fly, and unlike last week, the market needs a dose of Prozac to
handle it.
- Oil prices slide along with producer prices; good news for the economy.
- Lots of calls that the market is oversold, but there may not be much
upside before the FOMC meeting on Tuesday.
- Subscriber Questions
- Team Trades
Wednesday's warning shot was for real.
Last night we were concerned about the higher volume selling indicating
more bad news ahead. It is hard to fight with the numbers the market
shows us. The selling came again today, growing as the session wore on
just as it did Wednesday. Volume was lower indicating that there was not
wholesale dumping, but the point losses were no less painful. More
warnings before the open (JPM) and then after the close (MSFT) were and
are hammering the market.
Last week and early this week the market was able to handle bad news.
Stocks that were warning were not being shot; indeed, some such as INTC
even rose following the news. That was not the case today as JPM was
hammered. MSFT is being hammered after hours along with many tech stocks.
This in spite of good earnings by ORCL, and outstanding earnings once
again posted by ADBE. Those two are higher after hours, but they really
were whacked during the session; the modest recovery after hours has not
come close to erasing the day's deficit. Nasdaq futures are down 57
points after hours, and unless something happens between now and tomorrow
morning, we can expect a down open that will blast through the gap up
point at 2700 and test 2600. That would officially end the rally attempt
that started 8 sessions ago even with the confirmation we had. Soothing
words from Greenspan and finality to the national election could do the
trick. Seems that any change in market character is in hibernation for
now until the Fed takes real action and not just provide lip service to
the economy.
Action speaks louder than words.
Indeed, toward the end of the session today we heard on several financial
stations the plea to the Fed for help. "Have to have a rate cut." "It's
all in the Fed's hands." It took these characters long enough to join the
party, but it also took them well after the fact to join in the call for
no more rate hikes. The fact that the market has continued to tank in
spite of Greenspan's pep talk should, we repeat should, lead Greenspan and
his band of merry men to realize that action, not words, will be the
remedy to a tanking market, flagging consumer confidence, declining retail
sales, job insecurity, and the growing fear of recession. Hear the latest
poll? Those business leaders anticipating a recession in 2001 grew to 50%
from just 30% back in October.
THE ECONOMY
Will all of the pleading and economic slowing be enough to get the FOMC
(Frequently Orchestrating Market Crashes) to act and not just talk? The
clamor for a rate cut has gone beyond financial shows to the talk show
circuit as the public awakens to the thought that it is the economy,
stupid, and it is not in very good shape. Moreover, the protracted
political battle has diverted resources from the problem and exacerbated
the situation by claims that the new administration won't be able to take
the necessary steps to create an environment favorable to recovery, i.e.,
meaningful tax cuts. There is talk of the end of the death tax and the
marriage penalty, but that won't put that much money back into the economy
in a meaningful way. Are you listening Mr. Greenspan? Consumers were not
buying for the holidays before, and the further talk of the 'gridlock' in
D.C. that won't allow the administration to reverse the path you have put
us on is making things even worse. Combined with a trashed stock market,
there is little hope that the consumer will spend us out of this mess.
As for the economic reports today, they were labeled 'mixed,' but they
were anything but that. The PPI was below expectations, coming in at a
0.1% overall (in line with expectations) and flat for the core (0.1%
increase expected). That is down from October's 0.4% increase and is
further proof that there is no inflation in the economy. With oil prices
dropping even further today, the threat of inflation led by rising oil
prices (though as we said before, cartel action leading to increased
prices is not inflation at all) further diminishes. Not even some oil
drum rattling by OPEC about cutting production could prop up oil prices
today as more and more the market discounts a coming recession in all
commodity prices.
Jobless claims were called the 'mixed' part of the economic news for the
day as they came in at 320,000 versus an expected 355,000 claims. Last
month was 352,000 new claims. That had some saying that the lower numbers
put a damper on Fed action; well, this is the time of year when stores
should be straining to hire, but we see continued claims well above that
300,000 level that the jobless claims was below most of the year. We hear
of layoffs by IP, GM and others, and we know there are more to come. The
four-week moving average barely budged, coming in at 343,250 versus last
week's 345,250. The number of jobs being lost is growing.
A rate cut is needed.
The economy is showing the signs of the consumer confidence crisis: tanked
stock market, no holiday spending, no car buying, no durable goods
purchases. Now there is real concern about jobs in the new year;
Greenspan noted this back in October. Everything is already in place for
a rate cut, and if the Fed waits until the end of July, the tide will have
carried things further out to sea, making it harder to bring them back
with rate cuts. At a minimum it will take longer for any rate cuts to
take effect. Most say there will be no rate cut; perhaps we are being way
too optimistic. After all, the Fed did not even change its bias last
meeting and was scorned for not doing so. We have been reading the
economy for over a year and it has consistently showed us the slowdown was
faster and farther than most thought. We only hope that the Fed is
looking at the same tea leaves and makes the decision to help get the
country back to thinking about good times with enthusiasm. That is one
way to heal any perceived division in the country: get people excited
about the future once again, not anxious.
THE MARKETS
More selling, but on lighter volume. That does not mean the market will
recover tomorrow. To the contrary we have to deal with the MSFT earnings
warning that looks to be tanking the market after hours. Many said today
that the market was way oversold, but it will remain that way unless
investors feel better about the future. If it holds at 2600 it could
bounce up for another rally. If it bounces but fails to hold and turns
back at resistance, it will take the Fed to bring it back to life. That
is a lifeline not many are expecting to get, but if we don't get it there
is nothing to drive the markets higher other than another reflex bounce.
Overall market stats:
VIX: 28.27; +1.40. Volatility moved higher, but not sharply so on
today's selling. As we noted last night, of late it has been needing a
reading of 34 or so intraday to spark a turn in the market. We may get it
tomorrow with the MSFT warning, but the selling thus far after hours,
while strong, does not appear that devastating. Perhaps selling both
Friday and Monday before the Fed meeting will drive it to those levels.
Put/Call ratio: 0.97; +0.26. We get this from the CBOE each day, and we
have to admit the huge rise in the ratio makes us wonder if the data is
correct. If it is, this indicator is at the threshold of showing us a
turn; when the r