Date: Fri Mar 4, 2005 12:44 pm (YahooGroup)
Just wanted to bring to your attention that the DOW is at multi-yearhighs (since June 2001) right now. If it breaks 11000 its animportant psychological level.
To summarize:
1. Fed rates are going higher and so inflation is on a hold.
2. Market still has good liquidity and will continue to have thatuntil rates are 3.5 I think.
3. Companies have a high level of cash as compared to previous years.
4. Really think the job market will improve now and that willprobably be a huge boost.
5. Oil is high and might easily come down or stabilize. Markets arenot worried about oil right now which is good (although high oilprices cuts into discretionary spending and as bad for the economy).
6. This I think is the most underrated point: 3 years of levels below2150 for Nasdaq and 11000 for Dow. People want to see profits andwill not sell as much. We could be at a point where market wants togo higher than the 2001 levels slightly and it will be a confirmationthat we have moved beyond the .com bust and markets are correctlyvalued.
Bottomline I think there is a chance the DOW will break 11000 and themarkets will do fairly well until mid-April. Of course this isbetting against the trend. Chances of such breakouts is very low andits easier for indexes to just follow the bollinger bands (high andlow levels) of a certain range.
Nasdaq is not that strong right now. I think the only time its getsstrong seasonally (when there is no real growth) is during Oct - Dec.I think it will ride along with the DOW if the DOW does well in Marchand Mid-April.
Do you put money into the markets now: Don't know considering its atmultiple year highs but yet again, you could miss the breakout :)
Disclaimer: I am no economist for sure.
