No replies to this topic

[TTHQ Staff]

Gene Inger's Daily Briefing. . . . for Thursday, June 9, 2005: Good Evening; Directed energy . . . for upside continuity was suspected to wane slightly today, as a market shuffling just below recent highs consolidated normally, ahead of Thursday's 1st public chance for the Fed Chairman's chance to characterize or contrast remarks with those of the Atlanta Fedhead (though we don't see the incongruity that some see or think they do) and of course some trepidation ahead of Intel's midyear update (we also have no issue with that outlook, which like Texas Instruments, should be solid). There is some additional evidence about the progress in actual 'Directed Energy'; a topic we'll address later in tonight's remarks (of course as 'pick of the year' small-cap stock, Ionatron (IOTN) was seen as an emerging sector leader, so we've committed to regular follow-up's, having discussed the action or developments in a daily way as promised). Keep in mind that while the best buying opportunities are in our view well behind us now (so unlikely to be revisited), the idea of shares ever being 'in play' was suspected to be something for the 2nd half of 2005 and (reserved). As we bear-down on 'zoning' that, we're optimistic for interesting even robust moves (as we'll discuss). Daily action . . . experienced insignificant changes in the face of pending testimony by the Fed Chairman on Thursday, which should clarify that just because economic conditions are absorbing higher short-term rates, doesn't mean the Fed is completed with the task. Also, with the White House easing GDP forecasts slightly, there is now a logical reason for the Fed not to 'press' the higher rate bandwagon too much longer anyway. However, remember our view about lower rates versus Fed actions so far. As to the MarketCast (intraday audio-email) comments on Wednesday, we expected about what we got; not too much, and discouraged heavy trading accordingly. But the idea of a midday firming with some tempering thereafter, was certainly seen today. In Thursday's session, we suspect the odds will increase for an afternoon rally post-Fed speak, and a bit of a presumption that Intel will not rock the boat (more discussion). Of course any economist should realize that intermediate and long rates are lower all through this time, and not higher; therefore it's hard not to expect the Fed Chairman to reflect on the reality, that short-rates haven't substantially deterred U.S. economic growth. It's not news; it's the obvious condition that continues to prevail. That makes it even stranger that the comment from the Atlanta Fedhead (regional President) later yesterday suggesting a view that neutrality hasn't yet been reached, as far as policy by the monetary authorities, should negate the Chairman's prior remarks. So Atlanta is more hawkish would be the interpretation, but not really in our view. How so? Since Mr. Greenspan hasn't addressed any coming cessation in rate hikes, but merely said it's not hurting growth.. well.. one could interpret that as suggesting the Fed can hike at least one more time or so without negatively impacting underlying U.S. domestic economic growth. We think too much is made of all this, and the stock market is just resting prior to a presumed effort (particularly later this month) on the upside again. If so (and we suspect that's a more reasonable reaction) then these remarks are not so detached as the financial press reported, and they are both saying essentially the same thing (though there's no problem with 'dissent' in a sense within the realms of the Fed), even though the market interpreted their views as somehow contradictory. The Fed Chairman (more significantly) had some remarks about hedge funds; as he suggested and warned that hedge funds had picked the "low-hanging fruit" of easy profits and may be set for a fall as they assume more risks in a quest for high returns. The Chairman also mentioned in these remarks; that "significant numbers of trading strategies are already destined to prove disappointing; a point that recent data on the distribution of hedge fund returns seem to be confirming." We suspect he's obliquely addressing double-think perceived wisdom of strategies that heavily had shorted the Dollar while also short T-Bonds or 10-year Treasures for awhile, and were in direct opposition to these ingerletter.com forecasts for a firm Dollar and low relative rates. We thought through this and perceived that the international situation supported the flow of funds (including capital flight and Euro avoidance) to the United States and Dollar denominated assets in general, and that both would firm the Dollar and keep interest rates relatively low; for months. We think the Chairman is addressing those wrongheaded derivative strategies that were wrong in both directions; currencies and interest rates, and we think he's suggesting they will continue to miss the boat (this go-round, by the way, ingerletter.com thinks they'll overstay the low interest rate play and miss a transition that also will not be terribly bad for domestic economic growth). The Chairman also mentioned this; as he said: "one prominent hypothesis is that the markets are signaling economic weakness." "This is certainly a credible notion. But periodic signs of buoyancy in some areas of the global economy have not arrested the fall in rates." Well, we think that means high oil prices haven't throttled the drop in rates, so we think that's a good thing. It also could mean we don't have 'demand-pull' inflation in this Country, but just the remnants of cost-push commodity/energy price pushing, which to us can be addressed by two things: lower oil prices gradually, and also an easing of the appreciation in housing, which would bump the perception of inflation due to 'credit worthiness' implications. (This latter is a statistical fluke that in a sense has masked some of the inflation of the last couple years by virtue of how it's computed and strangely enough makes higher expenses seem like a lower pressure threshold on the average American family, when in reality it isn't; but the appreciation in housing prices can do that sort of massaging with such numbers.) In any event, the retreat of the June S&P (we roll forward to Septembers Thursday), was fairly normal for a breakaway move that achieved our goals then came back very appropriately. MarketCasts (intraday audio-email comments) suspects an attempt to revive come Thursday, after being slightly defensive early in Thursday's Greenspan testimony. We would not be at all surprised to see the market finish the week firmly. Talk about 'summer doldrums' continues to be ridiculous; we're having no such thing (plus as mentioned it's not yet summer). Daily technical work got overbought slightly at the middle of last week, as our 1204-1206 June S&P levels were finally assaulted, and that's about all we expected from the late May/early June upside affair until some sort of 'defense' was played. The defense was as mild as imaginable, and we noted might conclude sooner-rather-than-later primarily because money still is flowing into Dollar-denominated assets, with no reason to expect things to vary in a significant way. The S&P surpassed those levels and retreated after sucking-in buyers over the recent highs, and we suspect this pullback is part of a high-level rolling adjustment of a type that in the long-run proves beneficial for the market moving to higher levels. It is not unlikely that the S&P will (reserved ingerletter.com projections for members). For the moment, the chart patterns, including Nasdaq 100 (NDX) or Semiconductor Index (SOX) patterns, continue stronger than the Averages, and we do not envision as much disruption for techs as for blue-chips in pauses. (Additional commentary that focuses on the probable timing for anticipated full-blown boom in the tech sector.) It's also feasible that a slight slowing in Asia, coupled with the 'Strategic Reserves' in the U.S. now being full for the first time, contributes to less demand (a cessation of buying by the U.S. Government of Crude to fill the underground salt domes during a war and while prices are accordingly higher than they might otherwise be) for Crude in the months ahead, and allows prices to have tested the preceding highs (more). Stay tuned to this market, forecast to not evolve according to old common behavior. That's because the market has habitually not acted in a seasonal way this year, and about that we forewarned before the year's start. 2nd half prospects continue stronger in our view, as we've emphasized each day recently as the upward process began. Bits & Bytes… notes action by Texas Instruments (TXN), Motorola (MOT), Intel (INTC), Essex (KEYW), Broadwing (BWNG) and speculative Ionatron (IOTN). The acronym 'JIN', which you'll read about increasingly in the mainstream press, is a reference to the Joint IED Neutralizer; denoting solely a product of Ionatron, not of similar or competing technology which may be concurrently used (like 'jammers') or deployed (like 'RF guns', which have a fairly unimpressive efficacy in detecting and disabling IED's). The key to the Army's favoritism towards 'JIN' relates not only to the higher proficiency shown in tests (vis-à-vis other products), but towards the ability to not only disable merely in a temporary way (like jammers, that then leave undetected ordnance in-place to potentially harm military convoys or civilians passing by later), but detonate bombs, mines, and IED's (the former application against 'minefields' is something mentioned here before, but generally overlooked in the scuttlebutt about potential applicability in the future; heaven knows there are enough such 'fields' in the world to keep Ionatron busy for some time, if it becomes a humanist tool to rid the world of such misery). However, this does not negate the fact that JIN is merely an offshoot of the overall 'disruptive technology', known as LIPC (laser induced plasma channel; or as defined in the Pentagon; LGE for laser guided electricity.. same thing). Whether what is to be fielded in the near future 'in theatre' has another key element of LIPC, is classified. That would be use of 'variable lethality', which may determine both range and proximate destruction/disabling of either electronics in a vehicle, or of detonation of a device, or conceivably of both concurrently. As far as is conceived, it is the 'variable lethality' aspect that's essential to really making this a 'holy grail' of essentially a 'phaser' for use by our Forces and security personnel (phasers set-to-stun, vs. set-to-kill could eventually become an actual operative phrase; not sci-fi). So (large discussion reserved for members), while anything can happen in the future (who knows what will be developed), for now, the JIN from Ionatron seems to be the most promising device to counter-IED's. Recent 'range' discussions are not indicative of the maximum projective capability of the 'beams', but rather reflect ranging-radius that the military censors recently allowed mentioning. That is unlikely the maximum. We welcome recent coverage of this technology by USA Today, American Scientist, NBC News, Fox News and others now discovering JIN for the first time (and in some cases also grasping what may be down the road if everything pans-out. (Reserved.) Our hearty congratulations to the U.S. DOD, the Army, the USAF for their assistance, and also Congress, for pressing for JIN (by name) and above all to Ionatron, for their ability to move from concept to testing to development, in truly 'electrifying' speed. As and if field deployments are successful, this could move into greater production as well, after lightning-like speed for an Army military procurement program. Stay tuned. Members please note: we have no association with IOTN or any other publicly traded firm (never have had) other than as a shareholder of course. Yours truly remains an Ionatron shareholder throughout a year-plus coverage timeframe, as regularly noted. Comments are interpretative speculative postulations, provided 'as is with all faults', and 'all risks', with no assurance about future performance in any way whatsoever. In summary . . events continue reminding us of risks Allied fighting forces face, given continued attacks on free peoples, by elements including organized terrorist armies in Iraq or cells now uncovered potentially even in the U.S. (let's not forget Mexico in all of this). A world awakening to terror and nuclear threats grows, as domestic concerns retreat from absorbing us. Though few generally concur, our view has been slow but persistent American growth isn't negative, allowing protracted gradual growth without ancillary significant high interest rate pressures. There's no truly-restrictive monetary policy; nor is there likely to be one employed, irrespective of oil-induced inflationary pressures; though it's likely this is again tempered by further eventual oil price drops. McClellan Oscillator finds NY 'Mac' shuffling lower again (this helps preparation for an extension, we suspect, in harmony with our overall outlook); currently +85 today; as NASDAQ consolidates impressively; presently +12. Issues continue to include oil, which is tailing-off a bit, and of course Treasuries, and Europe, which likely moves to a less-hostile stance vis-à-vis the United States. Markets proceeded to resurge more dynamically explicitly as technology continued reviving aggressively, thus offsetting oil concerns, with sector leadership transitions continuing to evolve as oft-discussed here. A reticence to embrace multinationals has helped funds move increasingly into tech, as we postulated in recent weeks, and has developed. That trend isn't over yet. As to flies in the bullish alternative continuing; in our view, it's realization terror matrix issue continues, with challenges ahead, and as attacks and various difficulties show. Ongoing earthquake temblors continuing in lighter bunches across much of the West. Also the season's 1st Tropical Storm preliminarily targets a beleaguered Gulf Coast. We hope it misses New Orleans; among the least prepared metro areas to deal with hurricanes due to sea level proximity; plus an inability to move many people inland to safety. It's an historic city some scientists believe has slowly been allowed to.. 'sink'. Economic news for the most part remains satisfactory; basically no meaningful issues related to productivity or even jobs data concerning us at the moment. A contraction in early week action could contribute to posturing the stock market for a rebound that tries to challenge the highs later in the week (more discussion). At this mid-evening time, the S&P futures are hovering around off 50. Thursday will be the first day of a 'forward roll' into the September contract from the June for our guideline purposes. Enjoy the evening, Gene Gene Inger, Publisher