3/31/04

[Wheels]

The market is holding very strong today especially considering all of the negative news. OPEC decides to cut production despite hopes that they wouldn't. Factory orders came in way below expectations. Chicago PMI and all of it's components also came in way below expectations (with employment coming in below the all important 50 mark). Despite all this this the market held it's own this morning while it was heading down and seems to be heading up on stronger volume. And the C and the S imparticular are outperforming the dow and the nasdaq. (The I is really on fire which I'm sure is driving you crazy Tom since you were in for one day yesterday). I've been the C and S for about a week so I am pleased with this behavior. I know Tom has been waiting for a pullback to jump in. I wonder if Friday might be that day. Bob Pisani of CNBC says that there is high expectations for the jobs report and in fact those expectations are already priced into the market. This tells me that an upside surprise is almost impossible and a downside surprise is considerably more likely (especially in light of the employment figure I mentioned above). Stocks have had a decent run for a few days and bonds haven't. If that jobs report disappoints there could be a large rotation out of stocks into bonds. I'm thinking about taking that gamble and going heavily into the F for Friday. I'm also rambling. Any thoughts?

Dave

[tsptalk]

Yeah, the I fund mocked me today :). The market had an interesting day. In my comments today I mention two scenarios regarding the jobs report. Dave you hit on the second one.

"Ideally, the market will sell off a little between now and Friday and the report could be what triggers the next buy signal. On the other hand, if the market continues up this week, we could see a "sell on the news" drop Friday or Monday."

When everyone expects a good report, there is not much room for error, as you mention Dave. The rally we have had couldbe the "buy the rumor" rally. Even a good report could be sold (sell on the news) but a bad one will obviously be worse for the indices.

There were rumors that Greenspan suffered a heart attack today, but it was refuted. Those bears will do anything to get out of those short positions without a loss. :D

Also, being the last day of the quarter, there was a lot of finagling going on. As I mentioned before, institutional investors had to dump losers and pick up some winners for their quarterly report. Looks like about 2:00 ET the buyers came in, brought the prices up, then later they dumped the losers.

But I'm not sure I like the F fund. Regardless of what kind of market reaction we get from a good report, it won't be good for bonds. Only a bad report will help the bond market in my opinion.

Crazy day. I hope I'm not over analyzing it.

Tom

[Wheels]

Well that's my point. I'm really leaning towards a disappointing report. It would be a one day move for sure, and a gamble as well. I'll watch closely tomorrow. If stocks are up again, that will push me towards taking the gamble. Maybe 50 F and 50 I for one day. We'll see.

Dave

[tsptalk]

Oh, I get it. I thought you meant asurprise reaction of a good jobs report was unlikely, but you meantthe jobs report itself would come in weak. That makes more sense and yes, would be good for the bonds. Good luck. Even if you are wrong, the F fund won't hurt you like the other funds can so it's a pretty safe risk.

Tom

[lucky]

It seems very hard to guess what the next week will bring. There has been alot of news that the Nikkei has been way up in the first qtr. Have not been able to drag myself out of the C and S this week though. If the I liiks good Thursday I may move back and see what happens. There is some changes in regards to shorting that is supposed to take effect 4/1/04. That could help the market, I don't really know that's all above my head I freely admit.

Lucky

[tsptalk]

The last hour of trading today (Thursday 4/1) should be interesting as traders position themselves for tomorrow's jobs report. Will there be profit talking or will they be getting into the market? Dow's up 24 pts as I write this.

Tom