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800-634-3194(March 26, 2002) STOCK INDICES: Another one of those days with something for everyone to hate. The early dive to new lows, follow-through selling after yesterday's painful performance, was followed by a powerful rally that was kept in check by trendline selling. U.S. consumer confidence numbers jumped to 110.2 for March, versus 95 in February. This was the largest jump in 25 years and brought a wave of buying. But the close gains were trimmed considerably. Until such time as the earnings season is behind us, I suspect a slightly weaker tone, but also plenty of movement up and down. Don't assume too much in these markets right now. I'd rather hear from you than about you. In the near future, companies will be releasing earnings figures, and this may contribute to the market being on the defensive side. While I suspect further downside, I also see dips as a buy.
I doubt the Fed is planning to aggressively hike rates in the current economic scenario. I wouldn't be surprised by a minor hike possibly in June, but am by no means sold on the idea. Until such time as inflation rears its head, there is little reason for the Fed to hike rates. The U.S. economy and the U.S. stock markets can hardly be seen as "irrationally exuberant."
M. Steven Morgan www.commodityreview.com
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