Vince Farrell of Scotsman Capital-Verbatim

From: vince farrell
Sent: Sunday, February 03, 2008 5:13 PM

On this day in history,February 3rd, 1924 Woodrow Wilson died. It was the "Day the Music Died" in 1959 when Buddy Holly, Richie Valens, and the Big Bopper died in a plane crash. Ronald Ryan was the last Australian to be executed and it was this day in the year 1967 . Henceforth, it will also be known as the day the Patriot's dream of an undefeated season was ended by the no pro-bowl selections Giant team. Go Giants (and I'm writing this before the kick off.)

To more mundane matters. Eurozone inflation ticked in at an annual rate of 3.2% last week. I don't think we'll see the European Central Bank (ECB) lower rates anytime soon. 65% of the time when the averages were down in the month of January, the year proved to be negative as well. No gospel here, just noting it. But with the Fed having lowered the Fed Funds rate 125 basis points in 9 days, I would bet on the other third by the end of the year.

I do think, in the meantime, the reversal low of two weeks ago needs to be revisited. We at least have to come down enough so we can wave at it (about 11,600 on the Dow.) I would love to be wrong on this. David Rosenberg of Merrill Lynch, however, thinks we are in a bear market and rallies in a bear market are common. He points to the 2000-2002 bear market where there were 16 rallies of at least 5% in the S&P, and 35 bounces of that magnitude in the Nasdaq which managed, despite the rally attempts, to lose almost 80% of its value from the peak. He thinks last weeks action is just a rally in a bear market.