My market outlook

Hi, everyone Last couple of weeks, market volatility up a lot. Lots of 100pt up or down days. Up 200pt make you feel good, then crash down right away the next day. This look to me more like a market top than bottom. I expect market down toward 05/03 Fed meeting. At least retest low, broken 1900/10000. Even have a slim chance down to 9900/9700 and 1850/1870 areas. Then market goes seesaw trading in May but gradually goes higher to work out over sold condition. The best I can see is up to 2000/10500 levels. But watch out, it a BULL TRAP. Market could down start Jun/Jul time period with down side 9400/1750 not out of the question. Every economist on TV (just like Larry K. at CNBC) told us U S economy is sooooo strong. My answers “Strong my ass” Just look at Wal-Mart (1/4 of us retail sales), stock 52 week low. Target warns, Costco warns. The fact is the US “shop until you drop” retailers start to get hurt. The lower to middle level retailer, who support our economy, hurt by the prolong $50+ oil and start to drop. Last year, they “as the last one” try catching the last house buyer train use up to their neck margin (0% down payment, interest only payment loan etc) to buy the house. Now in order to keep their house payment, they start to cut their retail shopping. If the oil price continues at $50+ level, (which to me will not go down any time soon, NEVER maybe a too strong word use here.) housing could be the next get hurt. You as a U S citizen love America. But you don’t need to buy stock now. Buy stock NOT equal to love America. Remember that your original goal to involve in the stock market is to make some money. So in some sense we are all gold diggers. The fact is: this market is going down and will down more. Mark your calendar 06/25/2005. Two words “option expense” Now just imaging a small restaurant owner told his gold digger wife “Honey, guess what, the rent checks we paid to the landlords according to accountant is real money, have to added to our expense. So our restaurant actual made less money, as a matter of fact lost some money” I can see the wife shout “I want a divorce” For the same reason I can see the market act poorly in late Jun/Jul time period. Maybe this year we should follow the old “selling at May and go away” rule. (Nowadays investor stock hold time goes shorter and shorter, include me, hehe. Lots of individual investors does not even know the co’s full name or what kind of business its in. They just trade. They also don’t care what kind of different accounting stands co. use. As long as year-to-year earning down. Stock gets the boot.) The potential risk ahead to me is a US dollar crash force Fed. To increase rate 50 BP at meeting or even a intermitting rate increase. At current China situations (increase Chinese nationalism, increase demonstration, Japan became most hated country), US Congresses talking about trade war with China, talking about force China to revalue Chinese Yen, Sec of State Condi Rice running mouth with Japan about Taiwan’s freedom and help defend Taiwan etc not help at all. (Taiwan to China is like Democracy to US, it’s untouchable.) As a matter of fact China may response unkindly. (Just look at Russia government at Yukos situation: intentionally let a co. form few weeks ago at a phone booth buy multi billion Yukos. Just sent a massage to US government: In some situation you just cannot do a shit about it.) Currently China imports large quantity of natural resource materials, it’s in China’s best interest to somewhat revalue Yen upward (My best guess in 10%+ level). China just doesn’t like to do it in a push over way and/or benefit the international currency hedge funds. Also as John Snow said Chinese Government have people work with CBOT in the last couple of years to minimize effect when Chinese Yen flow. So upward revalue also likely will have minimum effect on China Government’s dollar on hand. To get G7 off its back, most likely, China will revalue Yen upward sometime this year (not free trade Yen), and at the same time change from Yen-US Dollar peg to Yen- basket of currencies peg. (Or even demand international trade bigger then certain $ amount must pay at right proportion of basket currency--just to send a massage.) The basket of currency approach likely will cause US$ crash. (By the way, due to England high debts and devalue PB, US$ replace British Pound as world reserve currency after WWII, I can see Chinese Yen do the same in 20 years later.) So watch out! Be ware what you wish for. We could have a roller coaster ride. Good luck & happy trading Always wrong but never in doubt MZC