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Mix-Ansicht- Just Cash? also nur noch Bares............... - Emerald, 11.03.2004, 06:55
- Einfach Cash wäre schade! Ich sag nur: SPA3.FSE, AVR.ASE, AMHI.NAP, BETA.NAS... (o.Text) - Ecki1, 11.03.2004, 07:39
Just Cash? also nur noch Bares...............
-->cash might not be trash after all
Cash Might Not Be Such Trash After All
March 11, 2004
Chris Temple, Editor/Publisher
The National Investor
www.nationalinvestor.com
In my last"public domain" commentary of February 18 ("Market Complacency May Soon Be Tested") I gave a litany of reasons why the several market trends of the last year or so were likely to be changing, at least for a while. (NOTE: In case you missed this, it remains on the front page of my web site, at www.nationalinvestor.com.)
Recent days have not only ratified this but-as you'll be reading-have done so, in a couple cases, in an even more dramatic fashion than I was expecting.
Take the behavior of the U.S. dollar for starters. As I had expected for some time, the dollar has unmistakably broken out of its downtrend. This happened when, late last month, the U.S. Dollar Index moved above its 50-day moving average. The reversal was confirmed last week when it managed to push above additional overhead resistance in the 87.5-88 area of the USD Index.
For a while last Friday, there were some who thought that this reversal was a flash in the pan. Horrid jobs numbers coming out again from the Labor Department sent the dollar careening once more against most currencies. But what these folks missed was that, as it fell anew, the 87.5-88 area on the USD Index had become SUPPORT! Its plunge of last Friday proving to be short-lived, the greenback has strengthened anew, especially against the suddenly lethargic euro; and this in spite of this morning's release of yet new record trade deficit figures.
As I have said repeatedly, I have little doubt that the long-term trend for the U.S. dollar is still down. We have discussed ad nauseum for some time ALL the MANY reasons WHY this is the case. However-just as fundamentals have mattered little where the stock market has been concerned in the recent past-neither do they presently matter much where the dollar is concerned. It is technical factors that now argue for a further appreciation for the buck, which likely has considerably further to run before this counter-trend rally becomes history.
The stock market has been bending for this and other reasons; but in the last few trading sessions is showing increasing signs that it also is about to break. For the last few weeks now, the Nasdaq has been trading below its 50-day moving average. Even more ominously-especially if the weakness of the last few days takes the Index below the 1990 level-it will have added to a recent pattern of lower highs and lower lows, as it grinds back down.
Until now, this technical breakdown for techs has been forgiven or ignored by traders, who have rationalized all this by pointing to the market's"rotation." So what, they say, if techs are looking a little green; people are moving from them into sounder issues. Thus, until we see the other indices break down, the Nasdaq's sub-par performance doesn't mean much.
I have bought this to some extent; especially as we've seen the strong performance of many basic materials and cyclical issues which have indeed done markedly better than tech stocks every bit as overpriced as they were four years ago today, when the Nasdaq hit its bubble peak of 5048. However, the bulls have been tiring. The supply of new stocks available is running ahead of present demand; a fact made clear this week when General Electric dropped its bombshell on the markets that it was selling nearly $4 billion worth of stock to help finance its takeover of Vivendi.
Courtesy of the conglomerate's announcement and subsequent drop in share price, the Dow Jones Industrial Average has this week joined the Nasdaq South of its 50-day moving average. The Standard and Poor's 500 is about to join them.
One of the interesting things about this weakening is that it is occurring in much the same kind of"ho-hum" environment in which the market moved inexorably higher for months. Volume is still relatively light. Volatility indices and activity in the options market still show a complacent investment community. In short, the weakness in the market over the last several weeks has been chiefly a function of buying demand becoming more subdued, as well as too much supply. Actual selling of equities with any conviction remains absent from the equation.
This is about to change.
As I explain in March's issue of The National Investor, traders will not be as forgiving once the NEXT technical support levels are broken in the major averages. The big question is how much-and how quickly-the long-chastised short sellers re-emerge as a potent force. For months now, few have had the courage to try to short stocks, as the technical behavior of the market has been so reliably strong (much more so, I must admit, than I'd ever expected.) But with increasing signs that the cyclical bull market that began a year ago is now over-or, at the least, is entering its most serious corrective phase thus far-we can't be far from a point where those betting against the market begin to regain their fortitude.
At that point, much the same as where the dollar is now concerned, fundamentals won't matter a whole lot; even for those who think Wall Street still has any. It will be the obvious technical signs that stocks have firmly reversed course that will carry the day. If the sell-off begins to accelerate in dramatic fashion as the remaining technical support for stocks is broken, we may well face a question of how many DAYS a 10-15% correction will end up taking.
Those still believing that gold will prove a refuge amid all this do so at their peril. As where the U.S. dollar is concerned, I do not believe the recent (and expected) behavior of the yellow metal is changing its long-term attractiveness. However, were you to take a look at gold's chart of late, you'll find it just as ugly as that of the Nasdaq; a well-defined downward trend punctuated by lower highs and lower lows. Sure, gold will break back to the upside eventually; and probably as it leaves the Nasdaq in the dust. However, especially if I'm right about the dollar, this is clearly no time to have too much bet on gold, especially when the yellow metal has become completely hostage to the euro.
Some areas in commodities have held up well (heck, even gold stocks for that matter, which have recently looked better than the metal itself.) However, as I wrote back on February 18, I don't think much will be immune from at least some damage as Wall Street completes its topping process, and breaks into a correction (or, maybe, Round 2 of the secular bear market that has been interrupted for a year now.)
In short, my friends, investors would be wise now to embrace in a bigger way the one asset class that has come into the most disrepute over the last couple years: C A S H!
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