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No. of Recommendations: 17
Before everybody starts throwing their hoarded cash into this "rally," think very carefully! about why this is happening, and whether it's sustainable:

1. The Greenspan Factor

I hate to rain on everybody's parade but, the man said that if the economy continues to slow, rates may need to come down.

Translation: If you are pricing in a rate cut, (as are all the WISE I've seen on CNBC today), then you are in for a nasty surprise in about a week.

2. The ALBORE factor:

Yippee, the election may soon be over, but so what? It doesn't change the fundamentals of a single company.

3. TA/Gaps:

I'm still TA-challenged, but the great and wonderful T-Rat-Oz has taught me to look for GAPS! A few of my favorite companies and their new (and sometimes old) gaps:

CIEN -- gap up today
EMC -- gap up today
JDSU -- gap up today
JNPR -- no gap today; three old gaps unfilled
QCOM -- gap up today; gap at ~65
SCMR -- gap up today
SDLI -- gap up today
SUNW -- gap up today

Also consider: earnings season and tax loss selling are coming soon. Can you say, "retest the lows?"

So, dive in if you must, but don't blame me if you hit your head on the bottom of the pool.

won't-be-fooled-again-augieboo

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No. of Recommendations: 1
Seeing how most portfoilios had the biggest one day gain ever today, I can only pray for the NAZ to go down another 1000 points. Time horizon 5-10 years and dollar cost averaging all the way to zero.

Regards

Hanson








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No. of Recommendations: 8
Augieboo wrote:

Translation: If you are pricing in a rate cut, (as are all the WISE I've seen on CNBC today), then you are in for a nasty surprise in about a week.

I don't think anybody was expecting any rate cuts in June. A bias shift was the obvious expectation. The cuts would most likely begin in the first quarter and the bond market has this priced in.

Yippee, the election may soon be over, but so what? It doesn't change the fundamentals of a single company.

That is correct, but don't ever discount sentiment. Uncertainty in any form has a direct effect on sentiment.

Also consider: earnings season and tax loss selling are coming soon. Can you say, "retest the lows?"

Who knows if the exact lows will be tested, but certainly the next 10 days will be crucial for appropriate follow through.

A couple of other things you forgot to mention.

Oil dropped below $30 today (4 month low) and OPEC (here in Vienna) has been quite focused on getting oil between $22 and $28 next year. It's sitting at $29 and change right now. I would imagine that OPEC will be able to reach their target price range next year. Time will tell if they do reach it.

That being said, I remember well the economic slow down in 1990-91 and 93-94 and the effect on the corporate earnings front. Estimates will continue to come down as we move through the next few quarters for many companies. However, keep in mind that the market is a forecasting machine and equity prices are priced out into what is going to happen in the future. In the midst of all those estimate revisions over the next couple of quarters, the market will eventually start to forecast out what those companies will do in future quarters if the interest rate environment starts to ease. Apple - no surprise - just warned....

BB





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No. of Recommendations: 2
I don't think anybody was expecting any rate cuts in June.

Sorry, that should have read December. The wine is good this evening...

BB
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No. of Recommendations: 0
Of course, the main thing to remember is what the college professors teach - the market is always efficient! It is always perfectly priced based on the fact that all news is universally known, and therefore there are never any bargains or any overpriced stocks.

The fact that there is a ~20% difference between yesterday and today is immaterial, even with no real news. The only thing that causes stocks to change price outside their efficiency are random events which cannot be predicted. Therefore, there is no advantage to wasting our time doing either FA or TA, in spite of all the over-paid professional analysts who try to convince us otherwise.

YEAH, RIGHT! That's how all the college professors have made millions in the market! Try asking them to explain any part of this year using efficient theory. Great theory, just doesn't work.

Sorry for the rant, just finished reading "Irrational Exhuberance". Lots of great theory, not much basis in reality. Even though I agree that the market was overbought this spring, there is another professor who lives in a separate reality from me.

I think the current rally will bring us back towards rationality (from oversold), but as always, it's not really important how the market moves, only how YOUR individual stocks perform!

I still agree with the woodworker's tool buying creed. I've found it works for stocks just as well. "Buy the best, and only cry once." I still need some TA help to pick better entry points, but I've done well with that motto.

Today was exhuberant, some of it was rational, and some irrational. Now may be the time to think about moving over and "buying the best", regardless of the sector you are in.

JT
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Of course, the main thing to remember is what the college professors teach - the market is always efficient! It is always perfectly priced based on the fact that all news is universally known, and therefore there are never any bargains or any overpriced stocks.

Well, if you accept the premise that something is only worth what someone else is willing to pay for it, by definition, the market is always right.
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