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Politics : Idea Of The Day

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To: IQBAL LATIF who wrote (32930)	9/11/2000 12:11:19 AM
From: Peace	Read Replies (2) of 50167

Hi Iqbal, Missed the action on Friday but I am comfortably long here. The primary trend remains up. We rallied 630 points on the NDX from 3517 on 8/1 to 4147 on 9/1. A correction to this rise was inevitable but the degree was the big unknown. I look for most corrections to be in the range of 38% to 62%. Usually if the accumulation has been strong during the rise the corrections tend to be closer to the 38% range. This past rise came in a seasonably slow trading month and did not get the benefit of heavy accumulation. Hence I started to expect a steeper correction closer to the 62% range. That translates to roughly 3750 area on the NDX. During the August advance the NDX broke through the strong resistance line from the March and July highs. In fact after the first close above this line we never looked back and climbed another 300 points. Most advances through important resistance areas are followed by pullbacks to that resistance turned support areas. We should find that support now. I originally expected the market to charge higher in early September as investors returned from the vacationing periods. I think a lot of those investors realized that the market had been advancing for a month and was due for a correction and held back hoping to get in at cheaper prices. Well, that buying has yet to come. Once the market bottoms, and we should be at or close to it, we should get a powerful rally. Earnings warnings are a quarterly routine. Investors have come to expect the slowing economy in the last two months and should not find huge surprises on the aggregate. Overall, tech companies should continue to beat earnings expectations and should lead this market higher. On the other hand, if we decisively go below the 3750 area and/or we fail to mount a rally this week, then we will be looking at much lower targets. However, I am optimistic that we are very close to a bottom and the ensuing rally should take us much higher. Peace

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