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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 660.08

-0.8%

Nov 18 4:00 PM EST

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To: dennis michael patterson who wrote (44981)	4/4/2000 6:11:00 PM
From: pater tenebrarum	Read Replies (2) of 99985

Dennis, it is never a single external event that can be pinpointed to have cause a panicky sell-off. some will say it was the new moon today...<g>. seriously, i think we just saw a culmination of the pressure that was building beginning with the big break in the bio-tech stocks. you will remember i mentioned here several times that the amount of speculation in the otcBB stocks was a big danger sign...they are always the last sector to participate in speculative episodes. anyway, they also began to break down, shortly after the bio-tech peak. with one speculative sector after the other getting taken to the cleaners, i guess the negative reception the market accorded the MSFT news was possibly the straw that broke the camel's back. if you look at a Nasdaq chart, you will also notice the extreme spike in volume near the top, and the classic low-volume run to the secondary top, complete with a divergent higher high in the NDX. this happened right in the period trimtabs described as a record period for insider selling in the tech arena - at the same time growth funds had record inflows of course. the question now is, how many people are still trapped in positions bought at much higher levels and would therefore be willing to sell any rallies? this is something we will find out in the next few days... note that the dollar has held up very well so far, indicating that no serious exodus of foreign funds has taken place so far. i repeat what i have mentioned here before: the pace of credit creation in the US (in the form of FOMC liquidity injections) and the value of the dollar are the two most important things one needs to watch. both are candidates for eventually tripping the market up. regards, hb

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