Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: tradermike_1999 who started this subject	10/31/2000 12:11:14 AM
From: tradermike_1999	of 74559

The Final Countdown We are still stuck in the trading range that I talked about yesterday and this means volatility and choppy trading. It's a tough environment to make trades in. People watch the Nasdaq and when it goes green they buy only to watch their new positions drop into the red. Be patient. Don't try to force any trades. The Naz will breakout or down of the triangle formation soon. It has resistance at 3450 and support at 3000. If it breaks up then we should get a real rally to last several weeks. Down and we know what happens. Then we'll be waiting for another gap down bottom to buy off of. But until the Nasdaq breaks up or down you, need to be quick to take profits on breakouts and long positions. The countdown should end in two or three days. The market isn't going to wait until the end of the election, the end of October, or the end of tax loss selling or the other so called rally catalysts being tossed around. What is really going on is a pure war. It's a battle between people who buy everytime the Nasdaq dips near the 3000 level and the scared willies and short sellers who crush every rally. The tops and bottoms of the rallies are getting closer together and that means resolution is about to happen. One force will be defeated and the Nasdaq will make a sharp move that will leave one side shocked and will set a trend for the rest of the year. Until that happens trade with caution and use small positions in this choppy environment. I've updated the watchlist, but will play breakouts for quick profits until the Nasdaq gets out of this fight of indecision. I'm not sure which side will win. Looking at the three market averages gives me reason to think the Nasdaq will rally. The S&P and DOW have rallied well, although they look like they are ready to retrace those gains. The Put/Call ratio, TRIN, Hi/Lo indicators, and a few other indicators have indicated a Nasdaq bottom. However, when I go through the charts it is very difficult to find stocks that don't look like they want to continue to fall. It's a mixed picture. But if we do get the rally don't get delusional and think this is the bottom that marks the beginning of a whole new bull market. The people on CNBC seem confused about this. This AM I read a piece on their website by Ron Asana who said that the financial markets are factoring in a recession. After the close I saw him and some analyst argue that it is now factoring in a "soft landing." What you are seeing is the end of a business cycle. We've had an 8 year long bull cycle and we are now transitioning into a new one. People who believe you can go from one bull cycle to another without a serious economic slowdown or recession are simply crazy. To believe that you have to believe that the laws of economics have been repealed and that Greenspan has the ability to do things that have never been done before in human history. That's simply to hopeful and greedy. Their logic makes no sense. The bulls say that last weeks GDP numbers show a slowing economy so the soft landing is a success. That means no more interest rate hikes and no more horrors forced upon the stock market by Greenspan. However, if the economy continues along at this 2.7 GDP growth rate, with the collapse in investment spending, then earnings will continue to suffer. If earnings suffer than stocks are overpriced now! And there are a lot of reasons to believe that the economy will in fact slow much more. Once reality becomes clear consumer spending will dry up and then it will be clear what business cycle we are really in. That doesn't mean the market can't give us a bear market rally. Psychology still moves the markets and delusional people can make it go up. That's how all of the Interduds went up so much last year. So let's give a toast to the insane and hope they can put a good show on for us! If they get carted off let's keep our wits and know what to do.

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