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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 691.79

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4:00 PM EST

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To: Rarebird who wrote (40776)	2/19/2000 7:47:00 PM
From: Michael Watkins	of 99985

Is the reason why the Nasdaq has held up better than the Dow and S&P merely on account of speculation or is there something more fundamental going on here? 10 years from now more than half of these tech companies will no longer be around; but I'm pretty sure we'll still be seeing quotes from GE and C around. Will PPRO or SSSW or CHINA be there? Who knows. My take then is that the Nasdaq remains at its levels "merely on speculation". Tech companies producing tools to make companies like GE more productive should not in the end enjoy the big valuations that they are. There have been many technology and business management crazes. Business Process Reengineering; ERP systems; Centralized Computing; Decentralized Computing; Centralized Management; Decentralized Management; Mainframe computing, personal computing, network computing, ultra personal computing; now back to more centralized computing on the web. Spartan user interfaces; rich user interfaces; spartan user interfaces again. The internet is to computing as the telephone is to communications. Sure its important. But it will lose its glamour over time. Everyone now is expecting the Information Age Stocks to begin to roll over. I wonder. They just hit new highs this past Thursday. Well its always a bad thing when something attempts a breakout on higher volume, and then fails. So its natural for people's guards to be up. The divergence between the rest of the market and the techs can't be ignored either. For the NDX 3957 is a key level which on Friday the NDX came within 2 points of. Any action below this level and my guard goes up; a break of 3848 and I'll be looking for a rally to short (although mindfull that a rally could be the real thing...) On the Nasdaq Futures, the NDH0 level I consider key is 3973; the market closed at 3965. The first few bars are going to be interesting on Tuesday, perhaps on Sunday when Globex reopens. Again it will only be a hint until the lows in the congestion period are taken out and any subsequent rally fails. About the most diabolical scenario I can think of is that both markets rally but the Nasdaq starts to fail as money moves to seemingly safer ground; a big Nasdaq failure kills the rest of the market as all panic. ;) Lets watch what happens to the SOX and NWX, they should provide early clues. Both have more or less pulled back to their pre-breakout resistance which is now support (I'm looking at a 45 minute chart). Time to get defensive if they move back under support.

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