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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 14 4:00 PM EST

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To: jbe who wrote (48270)	4/26/2000 9:21:00 PM
From: Michael Watkins	Read Replies (2) of 99985

Re comments on that article, I wonder about the "facts" quoted (i.e. 'the average stock only down 1%'). Not sure what those average stocks are. In my model and real portfolios the average stock is down 17% off its high; my short portfolio is up 24% in the space of mere weeks. Looking at market internals, at the lowest low day the Nasdaq had over 600 new lows, thus the "average" stock is down far more than 1%. Since the begining of March, new highs have close to evaporated. Volume accumulation across all stocks on the Nasdaq shows a dramatic sell off begining in earnest at the end of March. The indexes may be weighted, but volume, new highs/lows, the Nasdaq advance/decline line -- they all tell stories. The lesson is simple: If you are gauging the market...by using an index that is prejudiced toward a few large-cap technology stocks, chances are that you're reaching the wrong conclusion. So in conclusion, I guess I don't agree with the author -- the lesson is not simple.

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