Hold On, Please Hold On
Equity market participants were euphoric after yesterday’s record rally in the Nasdaq. Today, buyers have been somewhat more selective as the trade is extremely quiet. Because of this trade being so light, I will give a couple of key levels followed by some general comments on the importance of today.
First off, we are expecting a range in the SPZ between 1365-1382, if the market breaks out of this range, it is worth going with the trend for a quick 600-800 point pop. However, all told, today is a day for planning and reflecting on the direction of the market’s next leg. Here are my thoughts.
And we thought Mr. G. was unfriendly. A stunning rally yesterday as Greenspan laid the groundwork for a Neutral bias moving forward, and more importantly, a possible easing early in ‘01. “In an economy that has lost some momentum, one must remain alert to the possibility that greater caution and weakening asset values in financial markets could signal or precipitate an excessive softening in household and business spending.†Does it get any better for those on the sidelines? A two-year Note yielding 5.49% is little competition for the Nasdaq that rose nearly the life of a two-year return yesterday at 10.5%.
Now the real test. Was this nothing more than a rally within a bear market? Or is this something bigger heading into the year end? Let’s look at the figures, the DJIA was up 339 points to 10,898 and is lower by 5.3% on the year. The SPX rallied 51.58 to 1376 and is lower by 6.3%. Finally the Nasdaq Comp rallied 10.5%, its largest one-day gain ever and is now lower by 29%.
During this entire decline we have not been able to sustain any momentum on the upside. If this changes, I think it is realistic to expect a serious effort by both the DJIA and SPX to finished unchanged on the year. All told, the remainder of this month should be contained to the downside—