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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 683.21

+0.2%

Jan 2 4:00 PM EST

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To: American Spirit who wrote (79689)	7/8/2001 11:26:51 AM
From: mishedlo	of 99985

Several signs of encouragement for the shorts are as follows 1) There is not that much gloating going on on the bear boards 2) EMC and AMD really really took the wind out of the 2nd half recovery nonsense 3) VIX and VXN low (but more importantly headed in the right direction) 4) Everyone counting on a great earnings run when I can not figure out why. Earnings will suck across the board and that you can book. Will they be bought like April? Well In April we had the 2nd half recovery lie and a surprise rate cut to keep us going as well as stocks that were hugely oversold (like 1 1/2 monts of oversold). Far far different conditions now. 5) The bears were covering on some threads. Signs of fear by some big bears with all this complacancy by the longs is not a very good sign for the longs. 7) Although TRIN watchers have been calling for rallies, TICK counts never have gotten excessive. We did hit -871 on Friday and perhaps that is good for a small bounce on Monday but that is about it with all the complacency out there. 8) Window dressing may have used up a lot of that "sideline cash" that I keep hearing about. Will there be a rally? Of course there will be rallies. The half-loaf theory says cover at 1850 and let someone else have the rest. Of course if that is everyone's plan we never get there cause everyone will start cheating 10, 20, 30 points in front of that and we only fall to 1860. But how big will that bounce be at 1850 anyway? That depends on HOW we get there. Will it be slow grinding (in which case we get a small relief rally) or will we see some -1000 TICK count days (like several of them in a row). The more fear the higher the bounce. It is as simple as that. We rallied strong in April on something other than strong fear (for other reasons). Those other reasons are now missing IMHO. Recoveries build slow. All this talk of a fast recovery is pure BS.

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