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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 680.44+0.6%Dec 19 4:00 PM EST
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To: pater tenebrarum who wrote (51272)5/19/2000 3:21:00 PM
From: Crimson Ghost  Read Replies (2) of 99985
 
Heinz:

A little simple logic. Must less sophisticated than complex technical theories, but worth considering.

If I were an Administration policy maker I would be striving to assure that we will have strong markets for the several months prior to the election. How best to do that? Simple -- get all the pain out of the way by summer. If the market must be smashed, do it early so the decks will cleared for a strong rebound starting late summer or early fall.

That is why those who opine that AG will not tighten further because it is an election year are wrong. He almost certainly will not tighten after August, but he could tighten a lot more by then -- another 100 points is not out of the question.

In fact if I was a Gore advisor I would be hoping for a big market smash the next month or two. After all the lower it goes now, the faster AG will stop tightening and the bigger the potential fall rebound.

Bottom line -- I agree that the market will trough by early summer at the latest. But looks like things could get a lot worse before then. Something like NAZ 2500-3000 and Dow considerably below 10,000 as the bear finally hits the old economy hard.

I see the biggest risks in the financial sector. These look hugely overvalued in the current environment and most are near their highs. Especially considering that many of them make more from trading than from their fundamental businesses. What kind of a multiple are trading profits worth? I see more downside risk in the financials here than I do in the NDX.

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