----- Original Message -----
From: Greg Simmons
To: Greg Simmons
Sent: Monday, September 27, 2004 1:56 PM
Subject: "MARKET UPDATE"
SEPTEMBER 27 2004
THE SPX CLOSED DOWN 6.59 @ 1103.52
THE VIX CLOSED UP .36 @ 14.64
WITH THE MARKET GETTING CLOSE TO OVERSOLD IN NEARLY A STRAIGHT I FEEL IT MAKES SENSE TO LOOK AT WHAT'S REALLY GOING ON IN THE BIGGER PICTURE...
AS I HAVE SAID MANY TIMES, THE "YEAR OF STUPIDITY" (MAR '03 TO MAR '04) WAS SIMPLY A BEAR MARKET RALLY WITHIN A SECULAR BEAR MARKET.
SINCE THEN THE MARKET HAS MADE ZERO HEADWAY IN THE "NEW BULL MARKET" THAT HAS BEEN SO HEAVILY TOUTED BY WALLSTREET,TV GURUS AND OTHER SOURCES.
THE ONLY REASON THE MARKET DIDNT FULFILL ITS OBVIOUS AND NATURAL DOWNWARD PATH WAS THE UNPRECEDENTED LEVELS OF FISCAL AND MONETARY STIMULUS THAT WAS THROWN AT THE MARKETS - - THIS WILL BE THE FIRST TIME IN THREE YEARS THAT THERE WILL BE NO LATE-SUMMER GOVERNMENT TAX REBATE CHECKS FOR THE CONSUMER TO CONTINUE TO PROP UP THIS FEEBLE AND ALMOST PURELY CONSUMER DRIVEN ECONOMIC RECOVERY.
BY ENCOURAGING MASSIVE CREDIT SPENDING AND CREATING A DEBT BUBBLE OF OVER $35 TRILLION DOLLARS THE NATURAL PROCESS OF BEAR MARKET WAS SIMPLY POSTPONED NOT CANCELLED.
NOW YOU HAVE THE FED RAISING RATES, NEARLY $50 CRUDE OIL - - WHAT HAPPENED TO THE IRAQ WAR HELPING OIL PRICES? AND AT THE SAME TIME THE SERIAL CASH OUT REFI GAME IS READY TO COME TO A SCREECHING HALT AS THE REAL ESTATE PRICES FLATTEN OUT OR WORSE YET FADE LEAVING THE PEOPLE LIVING OFF THIS WHAT SEEMED LIKE NEVER ENDING SOURCE OF FUNDS HIGH AND DRY WITHOUT THE MONEY TO SPEND, BUT WORSE YET, WITHOUT THE MONEY TO PAY FOR WHAT THEY HAVE ALREADY BOUGHT ON LEVERAGE.
I DO THINK WE WILL BE OVERSOLD SOON AND DUE ANOTHER TECHNICAL BOUNCE, BUT I FEEL THAT LOOKING AT THIS BIGGER PICTURE, PLUS INSANE VALUATIONS, SHOULD MAKE ONE VERY WEARY OF TRYING TO PLAY THESE MINI BEAR MARKET RALLIES.
-G |