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Grizzly's
Growlings Back Issues
Monday Morning Market Musings 11/16/98
Records are Made to be BrokenIn this digital age of CD-ROMs, you don’t hear the expression "a broken record" much anymore. The few remaining Bears on the Street have been accused of sounding like one.
For all intents and purposes, we have been stuck in a groove, with our FULL CRASH ALERT warning in effect since the July 17th top. Our ongoing outlook remains the same, as summarized the past few weeks:
Despite, or more precisely because of, the 1200 point rally since October 8th, the case for an imminent and massive crash really hasn’t changed. The precise timing of such an earthquake has always been the question. All is still according to plan, as described in Frost & Prechter’s Elliott Wave Principle, page 68: "Second waves often retrace so much of wave one that most of the profits gained up to that time are eroded away by the time it ends." That’s an understatement, guys! This ongoing bear market rally has been excruciatingly painful. It is accomplishing its goal of shaking the confidence of weak bears and re-encouraging the bulls.
Once again all eyes are on the decade’s most revered folk hero, Alan Greenspan. Traders and pundits seem split over whether the Fed will cut rates again at Tuesday’s FOMC meeting. If they do follow through and repeat the rate cuts of the last few months, the markets are likely to react with relief rather than rally.
As we stated just prior to the Fed’s 09/29 meeting,
Investors have already bet heavily that the Fed will announce a rate cut at Tuesday’s FOMC meeting. Perhaps a disappointing statement out of the Fed on Tuesday could be enough to trigger a downdraft midweek.
The market complied beautifully following the Fed's announcement on that Tuesday, with back-to-back 200+ point drops on Wednesday and Thursday. The odds are high the markets will repeat this pattern this week.
Not much happening overnight going into Tuesday morning trading and the Federal Reserve announcement. At 1:00am EST, the Asian markets are narrowly mixed and S&P 500 futures trading on Globex are off a couple of points from Monday’s strong close.
The "B" side of the broken record includes the following blasts from the recent past, none of which bodes well for geo-political and economic recovery
- Israel and the Palestinians pulled back from implementing yet another "peace accord."
- There’s "Blood in the Streets" of Indonesia again. As they did months ago, students have rioted and demanded the resignation of the president.
- Saddam Hussein once again backs down from provoking an attack at the 11th hour.
- In what seems to be a weekly event, Japan’s ruling Liberal Democratic Party announced yet another "economic stimulus package" to save the dying patient With this $148 billion public works and tax cuts package, at least they’re talking tourniquets instead of Band-Aids.
Hard evidence of the worldwide Great Depression continues to mount:
- "After-tax profits of Japanese companies listed on the first section of the Tokyo Stock Exchange plunged 70 percent from the previous year, marking the largest drop since the period immediately after World War II, according to financial reports announced Friday."
- "Almost half Russia's 1,500 banks face closure over the next few months because the government does not have enough money to save them," Andrei Kozlov, the first deputy chairman of the central bank, said on Thursday.
Read a plethora of economic and geo-political commentary at "The Spirit of Truth (link expired)."
"Perseverance is the greatest of all teachers."
-- Ancient Arab proverb
Grizzly
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