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 wrote (598)	11/12/2000 3:29:01 PM
From: tradermike_1999	Read Replies (2) of 74559

There is a real sense that things are spinning out of control. We have a crisis in the government that will surely weaken the power of the next President. We have a stock market that closed on an annual low Friday and is setting right on the 3,000 critical support level. The odds are that it will break that this week and then we are in uncharted waters which could create another large selling panic. We could fall all the way to the 2500-2800 range in the short term and I don't think the final low will be made until next year. It's bad. The weekly chart puts it in perspective and you can see the massive selling volume that has taken place over the past few months. We have yet to see the real panic selling that usually signals a bottom. Maybe a gap down tomorrow will be enough, but I wouldn't bet on it. . Everyone's eyes have been on the Presidential election and a few have blamed it for the slide in the Nasdaq. It has put a damper on it, but the big picture is still the economic slowdow. Best Buy came out last week and warned that a weaker economy and large discounts will hurt second half profits and sent the stock down 39%. GAP reported that third quarter profit fell 41%. Kmart announced that third quarter earnings fell due to price markdowns and slowing sales. DELL computers warned that competitive price pressures and slowing computer sales would hurt earnings go into the next few quarters. Although consumer confidence and spending still remains high the breakdown in retail stocks is evidence that consumer spending is in danger of contracting. Only the most foolish bubbleheads continue to deny that the economy is slowing. Bull markets don't return at the beginning of an economic slowdown. We'll eventually get a bear market rally which will be an opportunity to play breakouts, sell tech stocks, and go short. Until that rally comes the safest place is cash. And the Fed won't save things on Weds. On Tuesday Wal-Mart reports earnings and it will be critical to gauge their outlook for the future.

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