Zeev's Turnips Patch-No Politics (ZEEV)

[Alex G]

re: the similarities of this rally compared with the May rally


Positives:

- the market is a lot lower now than then... (duh!)

- we are in the seasonally strong period (although we've already seen a nice move up from the lows)

- the much anticipated 4 year cycle low is supposed to arrive in October (maybe TOO much anticipated?)

Negatives:

- liquidity is a lot less now than it was back in March. Mutual funds entered the month of September with an all time low ratio of cash to assets, and then lost another 12 billion during that month. In fact, mutual funds continued to experience net outflows even as the rally roared ahead last week

- volume decreased in NASDAQ, NYSE, SPY and QQQ as the markets advanced. If investors are really buying, why is volume shrinking?

- the market rallied, while fundamentals are getting worse. There is no sign that the recent slowdown is abating. Every piece of data that has come in confirms that the slowdown both in the economy and in corporate earnings is accelerating

- The ECRI weekly leading index (WLI) is down this past week to the lowest level since last November and its six-month trend is down which suggests a decline in economic activity ahead

- The semiconductor book-to-bill ratio showed a decline greater than any prior two-month period over the past 7 years, yet the SOX index was among the best performing last week

- neither the dollar nor credit spreads improved in a manner commensurate with the advance in the equities markets

- the geopolitical situation is no better now than it was back in March. We are supposedly on the of brink war, and terrorist activity is peaking up (but short-term could be a positive if the war rhetoric cools off)

- as for the positive seasonality factor: the markets continued to go lower from October of 2000 to April of 2001, despite the favorable seasonality that supposedly exists between October and March, and as stated above, we've already seen a sizeable bounce


bottom line, imo... it ain't no new bull market Dorothy, careful of that man behind the curtain