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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 659.00

+1.0%

Nov 21 4:00 PM EST

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To: Box-By-The-Riviera™ who wrote (34997)	12/10/1999 2:09:00 PM
From: pater tenebrarum	Read Replies (3) of 99985

Joel, i believe my post may have created a mis-understanding. i am not COMPLETELY discounting FA, in fact i believe that ultimately stocks will always revert to valuations that are in keeping with fundamentals. however, in today's markets this principle has been suspended for quite some time due to the massive amounts of excess liquidity created by the Fed, which has found it's way into the stock market. this process of enormously accelerating money supply growth was coincident with the beginning of the vast stock market gains of recent years, which proves my point (just look at LT charts of money supply growth and superimpose the S&P). lately, a new element has been added, and that's the open ended fantasy called the internet. the psychological climate and the liquidity backdrop therefore have combined to create a massive speculative run, and one of the aspects of this run is the sell-off in the broad list of stocks to free up money for momentum 'investing'. this is an IDEAL climate to be mastered via TA...i am pretty certain most people can agree that today's stock market valuations have very little to do with fundamentals. there's a vast number of stocks out there that look fundamentally undervalued, counterbalanced by the narrow list of stocks discounting the hereafter. this is a situation where TA is much more helpful in arriving at proper trading decisions than FA. if you are patient and can afford to take a long term view, FA will surely provide you with some potential future winners. they're just not the winners of today. the example you cite sounds like an exception to the rule to me... regards, hb

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