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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: Yogizuna who wrote (44187)3/27/2000 2:47:00 PM
From: Rob S.  Read Replies (1) of 99985
 
"Will this translate into less mania for the market?"

I think the answer to that questions has a whole lot to do with "Which market?" are we talking about. Despite some recent correction, the divergence between what I call the "darling stocks" or sectors and the rest of the market or "old world economy" stocks has been to the widest extreme ever in the history of the modern market. Greater than the 20's or 30'2, much greater than the 70's or 80's. So if you say "the market" will do such and such, you may want to preface that with the "market composed of darlings" or the broad market or the "market composed of except the darlings" or something like that.

What I call the "Schools Out For Summer" theory is specific primarily to the darling stock sectors. These are the sectors that are most attractive to wild swings, most followed by Internet investors (speculators), and most most promoted by the investment community. Therefore, I think these are the most vulnerable to a down turn in the enthusiasm that normally has propels them higher.

Some of the money that may seek quieter places to hide while investors are busy playing - and may help to prop up or even propel the out of favor sectors higher. In the entire history of the stock market the degree of divergence in sectors that we have now has never been sustained for more than 2-3 years. Some adjustment to that divergence is likely IMO. However, I think the tech stocks and other darlings sectors will remain hotter than the rest of the market for at least another 2 years - just maybe to a lesser degree.
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