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Strategies & Market Trends : MDA - Market Direction Analysis

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Oct 31 5:00 PM EST

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To: HairBall who wrote ()	3/19/2000 1:24:00 PM
From: KeepItSimple	Read Replies (5) of 99985

I think there is a 99% chance that the fed will announce it is tightening margin requirements next week. Obviously the big money heard about this in advance, so the "old economy" stocks, ie the ones that people don't go out on a limb with margin to buy, rallied in advance. With the margin requirements raised to 75% from 50%, there will be unbelievable forced selling in a most of the high flying momo stocks. People who are comfortably within margin requirements now will find themselves suddenly forced to come up with large amounts of cash to return to the new margin level, or they'll have to dump stock. Guess which one I think they'll do.. And imagine the cascade effect this might have. Greenspan WILL NOT LOOK LIKE A BULLLY if i raises margin requirements. He can point to the insane spike in margin debt over the last 4 months and say it is a "true danger to our economy". He won't raise more than a quarter point, because any more than that and the fed would be a target of blame. By raising the margin requirement, he will finally hit the market where it really needs to be hit, the super speculative tech bubble. The old boring economy stocks that make up the vast majority of our country's wealth and production will not get hit along with the tech stocks- which is what would happen if he tried to raise half a point or something more drastic. This way the fed can temper the market, and the media can blame the DAYTRADERS for borrowing recklessly. The perfect and ONLY way for the fed to fix the current situation with a soft landing (at least for the dow) without getting blamed for the upcoming nasdaq tech wreck. THIS IS THE ONLY EXPLANATION FOR THE LARGEST POINT GAIN IN HISTORY LAST WEEK IN THE DOW. THE BIG MONEY FOLKS ALREADY KNOW WHAT IS GOING TO HAPPEN!

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