WStreet Market Commentary letter
WHEN WE STICK OUR HEADS IN THE SAND IT LEAVES OTHER AREAS EXPOSED
By Charles Payne, CEO & Principal Analyst
7/19/2004 1:13:48 PM Eastern Time
Investors have become decisive in one area; they aren't willing to play the see-saw game all day any more. It is noon and the market has taken a decidedly downward turn after going back and forth for the better part of the morning. Once again it doesn't feel like panic, it's just a matter of a complete boycott by would-be buyers. Over the last few months, even unsophisticated investors have learned that by keeping their powder dry they might be able to buy stocks cheaper. (The reality is that many of those investors that are cooling their heels will still end up buying stocks on their radar at higher prices. Most folks just aren't going to A) believe that a bottom has been achieved, even when it has or B) not going to be able to switch their mindset.) Be that as it may, the market has never been designed to be static. When stocks stop moving, folks become afraid, and when folks become afraid they sit on their pocketbooks and/or sell. Ironically, this is when the smart money folks step up to the plate. I suspect so-called smart investors are buying, although nibbling would be a better description.
Tomorrow, Greenspan will address the Senate and everyone is waiting for his latest assessment of the economy. I have to believe that the Federal Reserve chairman will acknowledge the fragility of the recovery. Certainly the recent upturn in initial jobless claims, the decline in retail spending and the slip in the manufacturing sector will be brought up during the testimony to the banking committee. Two months ago I would have said that such testimony would be great for the market as it would buy time for businesses, particularly small businesses to accumulate more funds and build operations. Of course, corporate America is already sitting on a ton of cash, more than ever in history and they must begin to put those funds to work.
The 200-day moving average is popping up on most charts as the next test. The inability for it to hold could lead to a sharp spike lower
Pennies not a zero sum game as much as some zero game.
