The MDA thread has both bears and bulls. The bulls tend to be less vocal though. I posted my views there a couple of weeks ago and nothing has changed so I haven't gone back.
As far as market direction goes, I believe we are nearing a bottom and will soon have a melt-up. Wanna know why?????
OK, it is a mix of TA and trend speculation.
I believe that this pullback is healthy as we had gotten a bit extended. On the S&P future P&F chart, a pullback to 1380 will be a nice retracement to the upward sloping trendline. Support is at 1365, so that is my secondary target. Of the 4 main P&F indicators, only one has turned negative. This is the BPHiLO (BP = Bullish Percent). The BPHILO is a short term indicator so when it turned negative, I placed some hedge puts on some of my positions. The rest of the indicators are fairly stable, so this tells me that this is likely not going to turn into a major correction. If another indicator turns negative, I will start taking a much more bearish stance. So there is the P&F side.
On the trend speculation, Y2K is rapidly approaching. I believe that the general consensus is that it will be a non-event in the U.S. and will have various levels of event worthiness throughout the world and in some cases may be catastrophic. If you have money in foreign markets, where is the safest place for that money? (hint hint U.S.). Additionally, there has been a lot of money on the sidelines in anticipation of Y2K problems. A lot of that money is coming back in to the market as the fear dissipates.
Perhaps my most important point is that, though I believe strongly that we are in a stock market bubble, I also believe that we are still in the early stages of the adoption of the internet and other communications technologies. Most have not learned how to use the internet to make their business more efficient, converged voice, video and data networks are still in the nascent stages, most people don't know the full potential (or even the terms) intranet and extranet, the ramifications of wireless communications are immense, and a bunch of other stuff. My point is, that as long as there is still a vast amount of unknown potential, the bubble will not pop. As soon as China, Bolivia, Madagascar and Libya (for example) fully adopt internet technologies into their everyday life, this bubble will pop and it will make a loud bang. I believe that there is still 5 more years of unknown potential in the market.
Sure, we will have corrections along the way, but I don't see a prolonged bear until then.
John and Mike will very likely have extremely different views than I.
Tom (bullish on the Wild World of Stocks) |
