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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 694.07

+0.7%

Jan 9 4:00 PM EST

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To: HairBall who wrote ()	4/30/2000 9:17:00 PM
From: StockOperator	Read Replies (1) of 99985

Unfortunately I have not had the time to follow the actions on the thread lately, but I am sure there is a healthy dose of both bullishness and bearishness to go around. It would only make perfect sense considering the confused state that has managed to grip most of the street today. Soros, Robertson, and even Buffet have all come under the scrutiny of an ever evolving investment climate. These are different times. Technology and the world awash in dollars all chasing the next frontier (or ten-bagger) has done nothing more than reemphasize the two driving forces behind all investments - fear and greed. The difference today being that as the avgs climb higher and higher volatility is also ramped a notch higher as well. Of course many will want to blame the day traders for these rapid swings, however, the fact that the markets overall took close to a 2 trillion dollar haircut in such a short timeframe should offer ample proof that even the big boys are playing the momentum game now. Buy and hold? Daytrade? In this era of volatility which strategy do you think requires the biggest cajones? Of course I'm talking about putting fresh money into the market place, not the guy smart enough or lucky enough to see CSCO at $10 years ago. Personally, I think this latest round of margin calls has placed many of the do-it-yourself investors in a very confused state. I believe many are sitting on the sidelines badly bruised ready to give their money back to the professionals to manage. But at the same time you're seeing some of the savviest pros around throw in the towel. I am sure many will come to realize that losing money in the markets can often be much more enlightening than most gains. And like Druckenmiller says its like a drug when things are going well, which is why I believe many will find their way back into the market. Where do we go from here? When I look out over the investment horizon here's my take on some of the patterns that have unfolded on the charts. The first obvious sign being the bottom and reversal made on the TYX. It appears that the downward action of the past couple of months may be over and rates may start to push higher. Considering the strong fundamentals that would make perfect sense. The overall pattern on the DOW is pointing unimpressively higher. The main point being that the overall pattern over the past 14 months or so has formed an expanding top or megaphone type pattern with a series of higher highs and lower lows. This pattern is generally bearish, of course nothing is 100%. Upside resistance is roughly 12,000. One could also make a very good argument for a possible head and shoulder pattern already developed for the DOW (monthly chart). With that said I believe we are about to see another upside move in the tech sector. To include many of the dot.coms and recent IPO's that have taken such a beating. Keep in mind that the downward trend on the NAZ is still in place and that there is going to be great deal of resistance even to get to the old highs. So I would be leery of any strength early in the week in prices only to see increased selling as we head into the weekend. Especially as we get closer to the second and third weeks of the month. I do believe tech is once again going to reassert itself. Good luck trading. StockOperator

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