Drillbits & Bottlerockets

[JXM]

(from a post that I made on SI)

I am tending to lean to the rally side for the response to the fred. People were talking about yesterday's rally being action that priced in any rate cut. Considering the tremendous bull run last week, I think I will disagree. I think that yesterday's action was simple short covering in front of the fred.

Last week's action almost seems like the stock market was pricing in either a 0 or 25 bps cut instead of 50 or 75.

So, I think that I am looking for the rally to 2300, pullback to 2000 and then some consolidation between 2100 and 2200. Pure speculation though on my part. I do think that a bottom may be in place (at least for the naz) and this being (potentially) the third rate cut, I don't like the short side right now.

The one thing that may change my views there is that I think that the dow needs to get spanked hard before we can start making our bearskin rug. And last week's action was a mere scolding.

Naz 75pt chart
http://www.stockcharts.com/webcgi/Pnf.asp?S=$COMPQ&Y=U&B=75&N=A&T=on