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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 681.44

+1.6%

Nov 10 4:00 PM EST

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To: bearshark who wrote (38107)	1/26/2000 1:59:00 PM
From: pater tenebrarum	Read Replies (2) of 99985

bearshark, a few market timers i highly respect are getting antsy about this market. the only thing that could rescue the market is probably their unanimity in their bearish outlook...<ggg> still, while the sentiment measures have retreated a bit from their recent historical extremes, we're a long way from what's considered oversold conditions. not to mention the continuing divergences and non-confirmations in terms of market internals and various indices. a shake-out is needed imo to reduce the high levels of complacency. i don't know if you've seen my post regarding the K-wave. but i basically agree with Carolan on the subject, namely with his contention that we are in the so-called 'false spring' period right now. basically this is a period of a slight cyclical inflation flare-up within the bigger secular trend toward deflation. if this assessment is correct, we can expect a secular bear market to begin sometime between now and 2001 (meaning it may have begun already, but not necessarily so) as well as a severe global economic downturn - essentially the whole world may be destined to follow Japan into the liquidity trap. perhaps this outlook is too gloomy, but historically this is how disinflationary booms tend to end and K-wavers believe that this is an element that's needed to keep the capitalist system vigorous. the downwave should be accompanied by a big wave of consolidation (new/old economy, a la AOL/TimeWarner) as well as a weeding out of a great many of the boom's excesses. note that even if the idea of a secular bear to come is correct, this doesn't mean there won't be opportunities in the market on the long side. some of the better money managers in Japan have for instance done quite well during the bear market there over the past ten years. i have to concede however that all this may turn out to be a false alarm - IF the people proclaiming the new era and the demographic argument are right. regards, hb the EPIC pawns....i like that...<ggg>

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