June 30,2006
Hello,
The FED used some “slightly toned down language” that sent stocks soaring under very heavy volume. Giving us one more step forward in this turn the corner bear to bull market ralley.
In its policy statement, the central bank said "Recent indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of interest rates and energy prices." The Fed further added that "the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information." Previously the committee said, "Some further policy firming may yet be needed". Another quarter-point hike is expected at the August meeting. (IBD)
Again I will repeat a lot of volatility has to be created to get this flat line bear market moving. There are very clear parallels to the 1982 when the market finally took off in August creating the bull market that ending in 2000. If the FED is giving the signal they are topping out then the incremental interest rate increase environment will soon becoming to an end, the market will be doing some very serious catching up for the last 6 years of under performance. The transition period form bear to bull is treacherous, filled with volatility and finally very explosive on the upside.
James
www.jamesfoytlin.com
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