wndysrf Posted April 3, 2006 Report Share Posted April 3, 2006 Indexes are trading near the highs. Yet there is not much excitement or euphoria. Investors are still worried, primarily because of the "Fear of the Fed". Excerpts from todays WSJ: DJIA Flirts With Six-Year High Before Fed Puts a Damper on Party By E.S. BROWNING After showing signs of fatigue last year, the stock market began 2006 with a second wind. The broad Standard & Poor's 500-stock index did slightly better than the Dow industrials in the latest quarter, up 3.73%, to 1294.83. It rose 3% in all of last year. The Nasdaq Composite Index, whose volatile technology stocks have continued to endure sharp ups and downs, rose 6.1% to 2339.79 in the first quarter, its best quarterly start to a year since 2000. Last year it rose 1.4% for the full year. Although the major indexes jumped 25% or more in 2003, they slowed markedly in 2004 and 2005 as investors wrung their hands over the prospect of interest-rate increases. What investors are wondering now is when the Fed will stop raising rates and whether that will permit stock prices to climb faster this year. Some anal cysts warned that investors should brace for sharp ups and downs this year, as the outlook for interest rates and corporate profits becomes less clear. A common view among prognosticators was that indexes could show single-digit gains for the year, not that different from their performance since the boom year of 2003. That would mean that stocks already may have enjoyed most, or all, of the year's gains. The problem for investors is that the new Fed chairman, Ben Bernanke, isn't proving to be the stock booster they were hoping he would be. After he presided over his first Fed interest-rate meeting last week, he sent out a signal that he intends to be as determined an inflation fighter as were predecessors Alan Greenspan and Paul Volcker. The postmeeting statement said more rate increases might be needed to prevent inflation, which investors took to mean that the Fed would definitely push its benchmark rate to 5% at its next meeting, in May, and might send it higher in June. That meant that the fear of higher rates, which had held stock indexes in a limited range for the previous two years, wasn't going to be lifted right away. It also meant that money managers and anal cysts will be watching each economic report for signs of strength, weakness or inflationary pressure. That uncertainty about the Fed's plans, some anal cysts and investors worry, could help create more stock volatility this year than investors have seen lately. "The bull market does seem to be losing some steam," wrote Bob Doll, president of Merrill Lynch Investment Managers in Princeton, N.J., in a letter to clients. His money-management arm of Merrill Lynch has about $539 billion under management. "The number of stocks reaching new highs has been shrinking," Mr. Doll noted. "The market has enjoyed one of its longest stretches in history without experiencing a 10% decline. However, as we predicted at the beginning of the year, we believe such a correction will occur at some point in 2006." Some investors expect a full-fledged bear market, with a 20% decline from top to bottom. Many others think that, despite the volatility, any pullback will be more modest, which is why they predict another year of single-digit gains. A lot could depend on when the Fed decides that waning inflationary pressures permit it to stop raising rates. The optimism of Mr. Ankrim is based on the expectation that the Fed will halt after one or two more moves, with the last increase no later than the June meeting. (The Fed doesn't meet this month.) If the Fed raises rates much longer, however, "that blows up my scenario," he says. If the Fed raises rates as high as 5.5% -- three more quarter-point moves from here -- and still hasn't announced a pause, he says, "I don't see how this market would still advance in the face of that." ............................... 1st Quarter Review: Link to comment Share on other sites More sharing options...
crazy_ate Posted April 3, 2006 Report Share Posted April 3, 2006 By Chris Isidore, CNNMoney.com senior writer April 3, 2006: 12:20 PM EDT GM sells finance stake, board supports Wagoner Carmaker to get up to $14 billion by selling majority of its finance arm to a consortium; unusual statement in support of CEO. ------------------------ Anytime you see the highlighted phrase above it means the end is a lot closer than you think. Link to comment Share on other sites More sharing options...
wndysrf Posted April 3, 2006 Author Report Share Posted April 3, 2006 Hanging by a thread. A friend of mine called to tell me that a record number of puts have been traded on the IWM and IWN the 5 trading days. Can anyone else confirm this??? DMM??? Link to comment Share on other sites More sharing options...
DrStool Posted April 3, 2006 Report Share Posted April 3, 2006 Interesting day. See you in the WSE PRO. 2 days left to get a great deal on the Professional Edition. Place your bid at ebay now! Thanks Mark for a great show this weekend. If you haven't heard it yet, it's the second on the list here: http://www.streetiq.com/dir/CAPITALSTOOL.shtml Check that page often for all the latest Stoolcasts. We'll be doing more of them as time goes on. Many tanks for your support! Link to comment Share on other sites More sharing options...
wndysrf Posted April 3, 2006 Author Report Share Posted April 3, 2006 Still no sign of weakness in a lot of the semis. Poor Kathie Lee is dragging down the SOX. Others are doing fine. Link to comment Share on other sites More sharing options...
zman Posted April 3, 2006 Report Share Posted April 3, 2006 ok let's see what turn around Tuesday has in store 4 us Link to comment Share on other sites More sharing options...
tdultima Posted April 3, 2006 Report Share Posted April 3, 2006 i dunno but im looking at too many intermediate bottoms for it to be a top right now Link to comment Share on other sites More sharing options...
Bearman Posted April 3, 2006 Report Share Posted April 3, 2006 Low p/c all day .45 equity p/c @ close complacency @ its best Link to comment Share on other sites More sharing options...
wndysrf Posted April 3, 2006 Author Report Share Posted April 3, 2006 People can't wait to sell. Hardly anyone really interested in buying dips these days. Any time an index makes it to the high and can't break through, it is automatically assumed to be "The Top". Mc"Huge" had another free newsletter over the weekend. As usual, it showed a graph of the DJIA, SPX, and QQQQ with a big, bold, long, arrow pointing down at a 45 degree angle, indicating another "crash"...... Any wonder why that guy keeps lowering his suscription rates and offering "free weeks"???? Just like the E-Woofers from Gainesville, GA..... Link to comment Share on other sites More sharing options...
Bearman Posted April 3, 2006 Report Share Posted April 3, 2006 FWIW bagholders do not sell. they average down last to know Link to comment Share on other sites More sharing options...
LeeWhee Posted April 3, 2006 Report Share Posted April 3, 2006 Hanging by a thread. A friend of mine called to tell me that a record number of puts have been traded on the IWM and IWN the 5 trading days. Can anyone else confirm this??? DMM??? <{POST_SNAPBACK}> Don't know about "record number", but I'd characterize it as a "shiteload". Looks like someone bought over 100,000 IWM contracts today at the 76 strike. Most of them were May, Aug, Nov. But have no idea if these were hedges or what. That may have created a lot of IWM to buy at quarter-end and this morning, partially explaining the extended outperformance. Also, a ton of puts at the 74 strike for Apr which may lend support into OpEx this month. Still feel Rusty is cruising for a bruising, though apparently I'm not alone in that feeling. But don't know when the ax falls. They may have to burn the Apr putz first. Link to comment Share on other sites More sharing options...
wndysrf Posted April 3, 2006 Author Report Share Posted April 3, 2006 Low p/c all day .45 equity p/c @ close complacency @ its best <{POST_SNAPBACK}> The bucket shop futures gamers have been buying puts hand over fist the last two weeks. They are in a losing position, so now they are trying to "catch up" by buying a few calls. Unfortunately, its too close to OpEx, it won't do them any good. They should have been buying calls last week and buying puts today. Eventually, they will be liquidated and margined out, and those puts will be closed out before they will be able to profit from them. Timing is everything. Link to comment Share on other sites More sharing options...
wndysrf Posted April 3, 2006 Author Report Share Posted April 3, 2006 PigMen Pinball Again......... Link to comment Share on other sites More sharing options...
Whadda I Do Whadda I Do Posted April 3, 2006 Report Share Posted April 3, 2006 Whadda they say, "Walk away in May" return in Aug esp. semis sector. Fixed nearing 6%. Not much room for excitement here for regular investors. GM selling itself off in pieces for upper management separation packages. Link to comment Share on other sites More sharing options...
Tchaikofsky Posted April 3, 2006 Report Share Posted April 3, 2006 4:20 pm: The second quarter attempted to begin with a bang. Buyers were in control of the trading action from the early going, and virtually every area of the market participated in a broad-based rally. That rally lost steam, though. By mid-afternoon, the market began to pare its gains. By the closing bell, the Nasdaq was in the red and its blue chip counterparts were approaching unchanged territory. Beginning of quarter inflows had been behind the market's rise. A slightly softer than expected reading on the March ISM Index and some news on the merger and acquisition front gave investors a reason to buy. In the M&A spotlight was General Motors (GM 20.14 -1.13), which sold a 51% stake in GMAC to an investor consortium, and Lucent (LU 3.08 +0.03), which finally agreed to a merger with Alcatel (ALA 16.21 +0.91). Some less significant items included a third bidder for Aztar and reports that Constellation Brands (STZ 25.25 +0.20) may acquire Canadian winemaker Vincor. Essentially, the M&A front did not offer much of a fresh catalyst. Outside of it, developments on the corporate front were limited. Autos were a drag on the market following their March same-store sales results. Ford (F 7.77 -0.19) posted a slightly better than expected 5% decline, Chrysler (DCX 58.12 +0.71) booked a slightly better than expected 2% gain, and GM announced a much worse than expected 14% slide. GM was a particular drag on the Dow. GM's fellow Dow component Wal-Mart (WMT 46.77 -0.47) also weighed on trade. The retailer indicated that it expects a 1.3% gain in March same-store sales, which is at the low-end of its previously issued forecast. That news affected the retail industry, and Wal-Mart's decline also helped cap the Consumer Staples sector's Link to comment Share on other sites More sharing options...
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