MDA - Market Direction Analysis Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : MDA - Market Direction Analysis

SPY 671.91

0.0%

Nov 14 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: donald sew who wrote (28627)	10/7/1999 8:45:00 AM
From: pater tenebrarum	Read Replies (1) of 99985

Don, the NDX should be the last index to top out in this mania...at least that's what i expect in terms of historic precedent. this is due to the fact that cost push inflation is not seen as harming tech stocks at first...raw materials and intermediate goods price rises are not an important factor for them. otoh, those companies whose margins appear to be threatened will presumably be forced to spend more on technology in order to improve productivity, at least as long as they are unable to pass on the higher costs. however, the tech stocks' Achilles heel are their high p/e's. at some point, rising rates will lead to a shift of assets out of these high p/e stocks into bonds . at that point the drawbacks of owning these overpriced stocks begin to outweigh the perceived advantages they possess in a rising rate environment. naturally, being the most bloated sector, they also attract a lot of short selling and derivative based strategies that are meant to reduce the risks of the holders of these stocks. that is why we frequently get enormous moves in very short periods of time, as shorts and derivative strategies are being unwound. this game will be played to the hilt, until one day the bottom simply falls out...just as certain stocks are going to the stratosphere now for no good reason, they will one day begin to plunge for no discernible reason. presumably when your bearish wedge gets resolved... regards, hb

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next