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  • Rev Shark:

    Don't Guess Fed's Action; Guess the Market's Reaction
    5/2/05 8:45 AM ET

    "I try to learn from the past, but I plan for the future by focusing exclusively on the present. That's where the fun is."

    -- Donald Trump

    The Federal Reserve should help make this a very interesting week with its interest rate decision on Tuesday afternoon. Although the market has seen some good earnings reports and a sharp drop in crude oil, it has been primarily concerned with interest rates and inflation. The major worry is that the Fed will stay aggressive about inflation even though the economy has slowed.

    It has been a tough year for the bulls but there has been some subtle signs of improvement lately. The indices have held recent lows, albeit after only one retest; defensive stocks such as oils, steel, gold/silver and commodities have been hammered; and financials and technology stocks have shown some relative strength.

    We are by no means out of the woods. The trend is still clearly down, we have significant overhead resistance, and the underlying support is very fragile. Folks have been anticipating a market bottom all year and all they have to show for their efforts are losses. The dangers of that approach should be abundantly clear, and even though the FOMC decision on Tuesday holds the potential for a turn we have to be careful about being too aggressive in anticipating what will happen.

    What we can do at this juncture is make plans. What stocks do we want to buy if the Fed decision leads to a market turn? What actions do we want to take if we break below key support levels? The key to determining the reaction to the FOMC news will be understanding the market mood before the news hits.

    Clearly there is a lot of worry and concern out there and sentiment is at a low level. The good thing is that there is not a high level of anticipation that the Fed is going to be overly market friendly. If expectations are low the better the chances of a pleasant surprise.

    We have a positive Monday open, which always makes me cautious but there was strength in Europe, oil is down again and the Washington Post reported that terrorism threats in the U.S. are down significantly because terrorists are focused on the fight in Iraq. That sounds good but don't let your guard down -- this continues to be a tricky market with increased volatility, and it's very easy to find yourself poorly positioned no matter how good your planning.

    Gary B. Smith:

  • Gapping Up

    MYGN +4.6% (Phase II trial results for Flurizan), AIG +4.6% (to restate financial statements - WSJ), MATK +4% (extends 18% move on Friday), OSIP +2.7% (submits supplemental new drug application for Tarceva), SIRI +2.3% (mentioned in Barron's), PRVD +2% (bounces after 31% drop on Friday), GOOG +1.4% (Prudential raising tgt to $284), PDE +6.5% (Smith Barney upgrade; Jefferies upgrade), MTSN +5.8% (selloff overdone says Legg Mason), CRXA +39% (to be acqyured by GSK), WGAT +5.5%, ELN +5.3% (entension of Friday's 17.5% move), BOOM +5.2%, TORM +15.5% ... Under $3: GENR +17% (Evizon Phase 2 data), CPN +4% (seeks NYSE inquiry on rumors about its finances - WSJ).

    Gapping Down

    NMG.a -4.6% (to be acquired for $100/sh; perhaps price too low), MWD -4.2% (declines mgmt change), SEBL -2.8% (Oracle has discussed Siebel buyout, but talks aren't active - WSJ), SHRP -8% (negative Barron's article), ECLP -11% (reports Q1; CEO steps down; First Albany downgrade), CTIC -6.5% (reports Q1; announces Phase 3 results for Xyotax), WTSLA -6% (reports JanQ), BRCD -2.1% (guides lower), CMVT -1.7%... Under $3: STEM -6.1% (reports Q1; down in sympathy: ASTM -2.5%).
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  • Natuke vananenud info, aga äkki kellelegi pakub huvi:

    "In its most recent release, covering the week ending April 15th, the NYSE reported that specialists on that exchange accounted for only 15% of all short sales. Public short sales were 3.7 times greater than short sales from the specialists, an unheard-of number.

     Specialists are the market makers for companies listed on the NYSE, meaning that they see most of the order flow that comes in, and are responsible for maintaining orderly trading in their stocks.

    Because of that responsibility, they have access to tremendous information, something nobody else gets to see. It’s not surprising, then, that when specialists as a whole take extreme positions one way or the other, the market tends to follow. If they are leaning one way, then that means the public is leaning the other way, and I would much rather side with the specialists.

    The figures for the week ending April 15th were so unusual that we’ve never seen another time in history, going back to 1942, that exceeded the current one. The two readings that come closest were:

    The week after 9/11: S&P 500 was +10% one month later

    The week of 08/13/04: S&P 500 was +6% one month later

    The week after the 9/11 attacks, the public shorted 3.3 times as many shares as the specialists; the week ended 08/13/04, they shorted 2.6 times as many. Both were pretty good times to be a buyer along with the specialists." SentimenTrader.com, May 1, 2005 

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