kommt vom CB-Board, fand ich ganz interessant
Nacht allerseits
Belex

Msg#: 15420
From: david_neeran (David Neeran)
To: bearrister (Gordon Kinder)
Date Posted: April 06, 2001 at 20:04:29
Subject: Re: David r u bullish for next week, please?
Reference: David r u bullish for next week, please?


--------------------------------------------------------------------------------

Dyche,
Yes.

NOTICE: Those who do not want to read a long post, please
move on.


I am bullish, at least Monday & Tuesday, possibly Intraday top
on Tuesday. Then the usual swoon during pre-expiration Wednesday to Friday. Yesterday's market action was extremely bullish and I am leaning towards the view that today's decline was just a partial retracement, less than 38%, of yesterday's advance.
Thursday's market was an example of what may happen if antsy money managers - the ones with the tons of money on the sidelines - are given an 'excuse to buy'. A non warning from DELL was bullish!

Markets closed strongly today, sentiment indicators are still
suggesing the markets may move up a bit from here. I know you aren't a TA guy but bear with me: VIX, VXN, PC ratios, TICK, TRIN, and AdvDecl internals are suggesting more upside. MACD Daily has kissed and turned up like the Marquis' Double Pump Buy.
Hourly MACD is hanging around, it is flat to slightly down.

Of course, you & I and anyone with a molecule of brain cells understand one truth in Market 2001: the only thing holding up the market from a waterfall decline is the FED, or FEAR of FED.
Congress has passed the tax cut plan, Greenspan et al would not want to be perceived as the sole scapegoat for any further decline in the markets. Greenspan is a political animal, more so since he became Mr. Andrea Mithcell; he will be very much aware of the talk shows this weekend which will be flooded with the Tax Cut issue and the decline in job creation, biggest since Greenspan's last debacle in 1991. PG&E will not be far behind and the Republicans will squeeze Gov Davis B-lls until he screams, all towards the cause of Arnold Swarzen(long name) campaign for Gov of CA. China issue may be resolved over the weekend according to Hardball Chris Matthew, they are exchanging memorandum of understanding.


There are times when you have to go with the flow no matter how much you do not like it, and this is such a time. Just can't be caught holding naked shorts in this environment. Bears risk making the same mistakes bulls made at NAZ 5K: it just doesn't go up or down in a straight line.

Later this month after the rate cut and option expiration, maybe. Not now. You could spread it around - Straddles? Calendar Spreads? or just sit tight on the cash and entertain us with your unique and special wit and humor, not to mention your sometimes obtuse and earth-shattering (in)decipherable prose. Give the salmon a break, I hear you raked it in, surely you could afford a natural free-range chicken or two.
David Neeran


FED RUMINATIONS:

10:13 AM
FED TALK: The Fed is scheduled to hold its regular weekly meeting on Monday at 11:00 am. At that time it is possible that they will consider cutting interest rate in response to today's payroll report. The Fed will meet to consider, among other things, a"Review and determination by the Board of Governors of the rates of discount to be charged by Federal Reserve Banks." Many market participants do not realize that the Fed holds regular weekly meetings, creating misunderstandings. Here is a link to the Fed's meeting schedule.

2:30 PM
FED TALK: Surveys by Dow Jones and Bridge found that economists put the odds of an intermeeting rate cut somewhere between 40% and 50%. Bridge surveyed 24 economists at various firms and came up with a 47.3% average probability of an intermeeting rate cut (no sized specified). Dow Jones surveyed 21 primary dealers (those firms that deal directly with the Fed) and found that the median estimate of the odds of an intermeeting cut came to 40%. Dow found that the median mid-year forecast for the Fed Funds target is 4%, down from 4.25% in a poll following the March 20 Fed meeting.


:40 PM
FED TALK: Back-month Fed Fund futures contracts jumped today with the July, August and September contracts all hitting new life-of-contract high prices/low rates. The September contract, for example, is now pricing in a rate of 4.04%, down from 4.20% at Thursday's close. At that level, the market has almost fully priced in a full point of rate cuts between now and the August 21 FOMC meeting. The August contract is pricing in a rate of 4.15%, down from 4.25% at Thursday's close, and the July contract is at 4.19%, down from 4.28%. In other words, the market has fully priced in 75 basis points of rate cuts by the June 26/27 meeting and is working on more. As for the May contract, it is now priced at 4.61%, down from 4.66% on Thursday. If you assume a 50 basis point rate cut at the May 15 meeting as a"base case," that puts fair value for the May contract at 4.74% (15 days at 5% and 16 days at 4.5%). So, at its current level, the market has priced in 8 basis points more than that base case suggests. The two most likely scenarios, a 50 basis point intermeeting cut in April followed by a 25 bps cut at the May 15 meeting or the opposite (25 bps in April, 50 bps in May), suggest different odds. Assuming a 50 bps intermeeting ease and a 25 bps ease at the May 15 meeting suggests a fair value for the May contract of 4.37% (15 days at 4.5%, 16 days at 4.25%). So, at 4.61% the market has not priced in strong odds of such a move (less than 25% ). The other possibility, a 25 bps intermeeting cut followed by a 50 bps cut at the May meeting, suggests fair value of 4.49% for the May contract so at 4.61% the contract is pricing in roughly a one-in-three chance of that outcome. There are other possible scenarios (75 bps intermeeting followed by no move at the May meeting, for example), but the central message is that the market has raised the odds of an intermeeting move since Thursday's close but continues to recognize the Fed's preference for moving rates at its scheduled meetings.


<center>

<HR>

</center>