What Will Be, Will Be
Â
We
are waiting for the Fed meeting to shed some light on where
“they“
feel
the economy is going. If the Fed cuts rates by 25 basis points, it may
be just enough to spark the economy to move higher. And should the Fed
cut the rates by 50 basis points, it could strike fear into the
markets as it may indicate that the Fed lost the reigns of the
economy. Now what happens if the Fed leaves rates alone…hmm?
Would the markets say the economy is doing really well? Oh well,
I am not a soothsayer, so what will be will be.
In addition,
overseas we are seeing a strengthening Euro after being beaten down in
1999-2000,
when energy prices were increasing. The European Central Bank (ECB)
only cut rates once this year, even with all the negative economic
reports being disseminated. Now analysts are speculating that the ECB
will be cutting rates by 25 basis points at their
next
meeting on August 30th.
The markets have really
taken a toll on our stock selection and have
not
been very conducive to the intermediate term outlook…at least on the
long side.Â
In my commentary I mentioned
the Telcom Brasileiras (TBH),
which was a low–volatility
setup which looked like it was poised to break
down.
The fund was trading at 38.20 and today hit a low of 35.45 . I am not
trying to say it was a great call at all. What I want to point out is
that with ETFs it is much easier to go short because you don’t have to
wait for the up–tick
rule.
Coventry Health Care (CVH)
is moving up the right side of its multi week cup The company is
showing some promising earnings growth (35%,
26%,
50%
and 43%). Analysts are projecting earnings to grow by 18% for 2002.
Among the ETFs, the WEBS
Hong Kong Benchmark (EWH)
moved higher 0.6% and ran into some resistance at its 50–day
moving average.
The WEBS Canada Benchmark (EWC)
gained 1.7%
And the Ishares DJ Consumer
Sector Fund (IYK)
shot higher 1.5%.
Sliding in the session was
the Internet Infrastructure HOLDRs
(IIH)
which fell 3.1%.
The Oil Services HOLDRs
closed lower 2.3%.
As did the Morgan
Stanley Internet Street Tracks (MII)
which lost 2.3%.
Remember that all securities
are risky. In any trade, you should always reduce your risk by
adjusting position size and placing open protective stops where
you will sell your long or cover your short in case the market turns
against you. For an introduction to combining price stops with
position sizing, see Loren’s lesson, Risky
Business.
Greg