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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 689.51

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Jan 8 4:00 PM EST

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To: Michael Collings who wrote (53787)	6/12/2000 6:17:00 PM
From: American Spirit	Read Replies (2) of 99985

Overbought? Are you kidding? Many stocks I follow are at their yearly lows. Battapaglia sure sounds bulish. "Welcome to the Goldilocks economy Some years back, the term "Goldilocks economy" was used to describe a level of growth considered to neither "too hot" nor "too cold." I believe we are entering into another such period as annualized GDP growth moves toward a 4 percent annual rate of growth away from the 7.4 percent rate of growth seen during last year?s fourth quarter. Today on CBS MarketWatch Nasdaq slides 2.6 percent, Dow slips Motorola's Bluetooth plans Silicon Stocks: Citrix leads sector lower Biotech stocks skid StockWatch: Shake out leaves Net bargains More top stories... CBS MarketWatch Columns Updated: 6/12/2000 4:12:26 PM ET At the same time, I expect the core rate of inflation to remain between 2 percent and 3 percent per annum. In this environment, financial assets -- particularly equities -- should perform. Rising productivity and unit volume growth will remain the key formula for earnings growth. The bond and equity markets have not lost sight of these favorable conditions. The yield on ten-year Treasurys has drifted down from over 6.5 percent to 6.2 percent in less than a month and the broad market, represented by the Wilshire 5000 index, has advanced 10 percent from its recent intra-day low on May 24. The Nasdaq composite also is righting itself from its correction -- returning close to 20 percent from the same starting point. I continue to forecast 15 percent year-over-year growth in earnings from S&P 500 companies with 30 percent or more growth in earnings from the technology sector and the Nasdaq composite where robust demand from business and consumers continues unabated. As I said before, it is this earnings power that will drive equity prices to new highs as the year progresses. My year-end forecasts for the major indices remain 12,500 on the Dow Jones Industrial Average, 1,625 on the S&P 500 and 5,500 on the Nasdaq composite. My asset and sector allocations also remain unchanged. "

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