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Grizzly's Growlings Current Report |
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Monday Morning Market Musings 01/31/2000 |
| "As
January goes, so goes the year…"
The millennium celebration hangover continues in the financial markets. The year 2000 so far hasn't offered much in the way of aspirin or Tylenol to ease the markets' aching heads. With one more trading day to go in January, the S&P 500 is off 7.5% for the month so far. According to the Stock Trader's Almanac, this just may be the worst January in the last 50 years. Depending on Monday's trading, only 1970's 7.6% drop stands in the way of January 2000 setting this dubious record. Opening the week at 10,739, the DJIA is now down just over 1,000 points, or 8.54%, from its all-time high reached on January 14th. The NASDAQ composite lost over 8% last week last week alone. The carnage in the leading NASDAQ stocks isn't adequately reflected in the composite index. Qualcomm [QCOM] is down 90 points (45%) since its all-time high of 200 on January 3rd. Amazon [AMZN] is down 52 points (46%) since its high of 113 on December 9th. Yahoo [YHOO] is down 187 points (37%) since its high of 500 on January 4th. And on and on it goes. These formerly high-flyers are swimming in quicksand, gasping for breath, and market breadth. Are most investors worried yet? Maybe not, but several large mutual fund companies are worried about their investors being worried. Putnam Funds and Prudential are among those now offering optional "portfolio insurance" to calm any potential fears. For "only" an additional .5 % yearly fee on the assets in your account, you too can get a guaranteed minimum return on your portfolio of at least 5% a year. Actually, the portfolio insurance is a hybrid form of life insurance. Your heirs receive the difference between the value of the portfolio at the time you pass on to the Great Bull Market in the Sky and the highest value of the portfolio in the past. Remember the promise of "portfolio insurance," which was all the rage just before the 1987 crash? Is the bell ringing for Round 2? Ding Ding Ding Ding! Most of the angst in the markets is being fomented by the rising interest rate scenario, real or imagined. Yet once again, Wall Street is anxiously awaiting Tuesday's Federal Reserve meeting. Will Sir Alan of Greenspan and his Merry Men (and women) playing Christmas grinches, six weeks late? With Y2K out of the way, "the coast is clear." The establishment consensus is that the Fed will up rates by 25 basis points, with an outside shot at 50 basis points. Should you care about the Fed's actions? As we've pointed out several time in past Grizzly's Growlings, the Fed's actions have little real consequence to the markets. The Fed is always a laggard, reacting to changes in the market place. With rates having surged throughout December and into mid-January before rebounding sharply the last couple of weeks, the Fed just tries to not get caught too far out of line with the going rates in the market. If the Feds do surprise the markets with a higher than expected rate hike, it may be the snowflake that triggers the avalanche. So who's gonna take the fall for the market fall, whenever it surfaces? See MSNBC's prime candidate: http://www.msnbc.com/news/354858.asp#BODY The intermediate-term Elliott Wave patterns are a mess in most of the markets at the moment. The NASDAQ and DJIA have been diverging widely. The week ending January 21st saw the DJIA rise 4% while the NASDAQ Composite fell 4%. Often such inconclusive and conflicting patterns and short-term trends spell eventual doom for the prevailing larger trend, which of course has been bullish for it seems like eons. Are we FINALLY at the finale? Has the bubble burst? Has the Fat Lady REALLY sung? Well, having been premature with our earlier calls for all of the above, we obviously aren't able to call the exact top with any degree of precision. (Can anyone?) The history books will tell us when we got there. Until then, US STOCKS REMAIN ON FULL CRASH ALERT! Indeed, it was a super Super Bowl. Congrats to the St. Louis Cardinals err-LA Rams err St. Louis Rams who held on to beat a gallant comeback effort by the Dallas Texans err Houston Oilers err Tennessee Titans. Of course the Super Bowl commercials have become as important as the game itself, prominently denoting and highlighting, at $2.5 million per 30 second clip, the latest social trends and cultural phenomenon. Grizzly's favorite from Sunday: The E-Trade parody of those live-action cop and hospital dramas, featuring an emergency room patient with "money coming out the wazzoo." Very funny stuff, but also very indicative of the extreme optimism and euphoria abound in the markets today. No anesthesia required for this patient! Americans spent more
per capita in 1999 on taxes ($10,298) than on food ($2,693), clothing
($1,404), and shelter ($5,833) combined.
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Grizzly |