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Thursday, March 20, 2003

Investors Looking For A Photo Finish

by  Charles  V  Payne 

Although we all think we know how the market will respond to the sounds of battle, there is a ton of anxiety in the air. When we fought the Gulf War, the level of expectations was such that the conflict would be long and arduous, as the opponent was battle-tested, large and ready. Now, the level of expectations for a swift victory is so high that the sight of any US body bags could dent the public consciences. If America’s military lives up to expectations, the chain of events will be such that the economy and market could make a sustainable rally. If Baghdad falls, I think investors will kiss stocks, with the passion that the sailor in the famous post-war (WWII) photo kissed the woman he’d just met in Times Square. (There is no denying that old attraction is coming back.) While investors grapple with the winners and losers in the stock market, it looks there are some distinct winners and losers in the US political scene as it pertains to the Iraq situation.

Most would-be winners and losers are debatable, but I think there is no doubt that Ari Fleischer has come out smelling like a rose. His calm demeanor and deft ability to turn a harsh question into a smart answer has served his boss well. It’s also helped the stock market, which always finds a way the brake its fall when he begins to address the White House press corp. As for the losers, that is a different topic for a different time. Since we’re talking about time (I know it’s a corny segue) the 8:00 PM deadline came and went without any takers to the Bush demands. There have been tons of rumors however, of defections and last minute deals. Doesn’t matter now, as this is an irreversible process, the time has come. The stock market, in the meantime, is waiting but it is clear that it is also in a state of anticipation. Coming into the month, all lulls were harbingers of major moves to the downside, now this same type of lull seems to portend to future moves to the upside.

I’ve been hoping for a pullback the last couple of session to test former resistance points, but that just may not happen. It would make life so much easier if the S&P 500 pulled back to 851 or so and held for a couple of weeks. The market hasn’t cooperated for years, why should it become easier now? From a technical point of view, 850 will be re-tested sooner or later, I’d prefer sooner, but let’s see how it goes. We aren’t forcing the issue this afternoon.

God Bless America and God Bless the US Troops