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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 670.92

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Nov 7 4:00 PM EST

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To: pater tenebrarum who wrote (40267)	2/14/2000 1:43:00 PM
From: Crimson Ghost	Read Replies (3) of 99985

Heinz: Shepler Capital Management sees BIG BREAK coming in tech: Shepler Capital Management: February 13 - 17, 2000 Twilight Zone! Our outlook remains very bearish for equity prices. It seems to have gone almost unnoticed by the majority of "talking heads", but the S&P 500 has traded in negative territory this entire year after topping on the first trading day of 2000. But, investors seem to have forgotten about every index other than the Nasdaq. And shouldn't they? I mean if you can "earn" 80% per year buying and holding the tech tulip bulbs why would any rational investor own anything else?... From our perspective, this kind of dangerous "investor" (read margined-up speculator) psychology is a loud and clear warning bell that THE TOP is close at hand. We are just waiting with baited breath for that one little pin prick that will blow this psychotic tech bubble to tiny pieces. Will it be cyber-terrorists bringing the internet to its knees? Or will it be a botched bug-ridden release of Windows 2000 from tech bellweather Microsoft? Or maybe it will just be a good old fashioned recession caused by rising inflation and the corresponding rise in interest rates. It really doesn't matter much to us what the catalyst is for a return to sane equity valuations, but we can be fairly certain that one is on the way in short order. In the meantime, we continue to see the NDX 4000 level as a ceiling for the tech bubble. Despite several attempts to break though this ceiling last week, Friday's sell-off sent it back below this resitance zone. The action of the tape tells us that the smart money is selling into rallies here, so we will follow their lead. But for now there are also plenty of greedy lemmings still buying dips. This is creating major volatility, which is typical prior to a change of trend. Soon the trend will be firmly down and when that becomes evident to the majority, look out below.

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