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To: William H. Hueb DOES REWARD OUTWEIGH RISK NOW IN THE CURRENT MARKET ENVIRONMENT? EARNINGS PEAK; AND A CHANGE IN MARKET WINDS WREAK. Why a potential 15% to 20% (initial?) correction is now knocking at the back door. (this is one man's humble opinion and should be taken only as that. Since this is a very sensitive topic I would humbly suggest that those who may be offended by a "bearish treatise" to stop reading this post now and move on. Thank You. I run the risk of being barraged by potentially very emotional and angry feedback. I can very well understand this since one works hard for their money and would not want some "nutcake" rambling "the sky is falling" sentiments only to lose money in the market. I humbly suggest to those that the market is not a riskless investment and is not guaranteed to make anyone money. When it gets to the point where "its easy to make money in this market and its the only game in town" mentality, one needs only be reminded that the market is no respector of person and will beat to the tune of its own drummer. Enough said. Now for the OVERVIEW OF THE MARKET. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> No question the market has been in "full gear position" since the fall of '94 and this has been reinforced with the pre-4th of July holiday rally. All major indices have posted new highs as measured by the DOW, NAZ, S & P, SOX et al. In the most previuos run-up since the early April pullback, it has been the DRUGS and BANKS that have propelled the market higher, and the TECHS have been the followers and playing follow the leaders since posting COMP lows in late April. MSFT DELL and CPQ have led the techs with INTC CSCO and other networking stocks bring up the caboose. The techs for the most part have been the primary leader since the fall of '94 and this change in leadership has reversed since April. Can the market go higher another 5%? Absolutely. But with every new high, and higher high being recorded on an almost daily basis, self-fulfilling expectations of the next high make the "illusion that nothing can stop this market" even more ominous. More to the point,folks have been conditioned to buy the dips b/c they have been rewarded every time in the past and this could lead to a world of pain if the rules of the market changes, and the dip no longer rewards them but only magnifies their losses from 20% to 35% or greater. We are now at a cross-roads in market sentiment, and the winds they are a changin. The reasons why my next post. Again, the next post may be quite uncomfortable to many and I urge you to only read at your own discretion. One man's humble opinion. JT |
