Subj : Market Action To : All From : Paul Rogers Date : Tue May 04 2004 07:13 pm


The market was subdued until the Fed announcement was released.  Then it
rallied for a half-hour, turned and over the next half-hour retraced its
steps almost exactly.  They closed up a little bit, with volume up 12%.
Now, it's debatable whether the market should have initially reacted
with that rally, but it does reveal something about the attitude on the
Street.

The Fed statement was taken by the Street to mean we're going to get an
increase in rates at the August meeting.  Their rationale is the June
meeting is too soon for everybody to get ready.  I agree the Fed doesn't
want to frighten anybody, doesn't want to take a chance becoming an
issue itself until December.  I've told you that before:

10/28/2003
Look, absent economic crisis, the Fed is NOT going to play a role in the
campaign season by jerking interest rates around!  Today's action is
mostly meaningless, to the extent that it was caused by the Fed.  Don't
get suckered into a move if that's the rationale.  Eventually they're 
going to raise rates, everybody knows that.

03/05/04
Mark my words, as tough as it can be to figure out what Alan Greenspan
just said, he doesn't have a political tin-ear.  If the choice is the
Fed increasing rates in April or October, just before the election, it
will be sooner than later!
  
So maybe we will get small rise in August.  That will influence the
market, not only psychologically but because short term interest rates
are one of the variables in figuring market valuation.

Remember this:  The Fed is raising rates because it unnaturally
depressed rates to kick-start economic growth when it appeared deflation
was a real risk.  The great market we had in 2003 was a result of the
anticipation of the improving economy and improving earnings we are now
seeing.  The Street will continue to anticipate the future, and it needs
to be able to anticipate more really good news in order to bid up prices
from here.  Normally the market will be "buying on the rumor, selling on
the news."  But never get confused, good news is good news.  And that's
what you need to pay attention to for long range investing.

 Price     Vola-     Momen-    Volume    Oscil-    Summ.
 Change    tility    tum                 lator     Index
 -__+      -__+      -__+      -__+      -__+      -__+

 (___      <___      _|__      ___|      <___      __<_     04/28
 _<__      _<__      _|__      ___>      <___      __<_     04/29
 _<__      _>__      _|__      __>_      <___      __<_     04/30
 __<_      _>__      _|__      __>_      _|__      __<_     05/03
 __|_      _>__      _|__      __>_      _>__      __<_     05/04

Timing Signals:  I don't use or recommend timing signals, but they're
fun to watch.  If I did though, well, I might use something like this.
(Be warned!!  It tends to whipsaw around signal points!)

Last Signal: SELL       Date:  04/28/04 S&P:    1122
Winner or Loser:  Loser                 By:     -18

See my market tracking charts for '02-'03 and my investment strategy
study at my website(s):
http://www.xprt.net/~pgrogers/Pers.html
http://www.angelfire.com/or/paulrogers/Pers.html
http://www.geocities.com/paulgrogers/Pers.html

Paul Rogers, paul.rogers@angelfire.com -o) http://www.angelfire.com/or/paulrogers /\\ Rogers' Second Law: Everything you do communicates. _\_V .... Remember when unsafe sex was being caught in the act. ___ MultiMail/MS-DOS v0.35 --- * Origin: The Bare Bones BBS (1:105/360) .