Update 01/14/08

Last week had a distinctively different feel to it then the previous week.  The break in the five year channel that occurred could have been disaster a couple of months ago.  But the market found support along what appears to be a new channel bottom, the trading became a little more even and even though the week was ultimately a downer , it really was not bad.   This new channel would generate a very anemic growth rate and would be lucky to outstrip inflation.  Only a timer would benefit in that long term environment.  Even with the new regulations on their way, I’m still optimistic that we can put it to our advantage.

If the market does not get blown out by the next shoe too drop, it now looks like a good place to buy in if you are out and looking to beef your returns up a little.  It would take a couple of moves over a week or so to make it work.  This is now the type of timing that we may have to get used too. 

Of course, I’m not out nor have I been since the beginning of the year.  I am still waiting for the oversold rally to materialize so I can exit the market at some point in the near future and scramble over to bonds.   I will remain in stocks until we get something or we break below this lower growth support level.  I do not expect to see new high’s anytime soon, but there is an easy 10% range of flexibility to this market and large longer swings are what we can work with given the new trading environment.

On to the fundamentals:  A 50 point basis cut to the fed funds rate would really help things out, except that folks are already starting to bet on a 75 point basis cut.  That’s a shame because it’s setting the market up for an expectation that will probably not be realized again.  This is becoming an all too common pattern.  Then again, the fed has not moved 75 basis points in a long time and selling the general market that idea might be a tough sell.  I’m not buying it.

Griffin