MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 681.44

+1.6%

Nov 10 4:00 PM EST

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To: American Spirit who wrote (74913)	4/14/2001 4:42:28 PM
From: t2	Read Replies (3) of 99985

I capitulated weeks ago and now am back. Now I think we have a sudden change of direction and when shorts capitulate that will be the top Biggest mistakes made by the bulls as well as the bears is that we think that markets just go in one direction. The bears are where the bulls were last March 2000. That is the way I prefer it stay. It makes for a better short covering rally when they realize that the resistance levels on the Nasdaq as determined by technicians are going to cut through easily. The explosive potential of this market is being underestimated. There are lots of shorts but there are also lots of mutual funds that raised cash levels beyond what they needed by redemptions for tax reasons (mutual funds always over do this). -Mountains of cash in money markets -Mountains of cash in mutual funds -tech being bought by value mutual funds -heavy heavy short interest in Nasdaq stocks (just look at last week's JNPR move to get a taste of it) -bears very confident in their predictions. -the most popular message boards on SI are overly bearish and message boards in general are very bearish. -no IPOs -too much cash went into bond funds--possibly ready to head back into tech. -as mutual funds holders see how the techs seem to be recovering, they are unlikely to take cash out of these sector funds. That is why I feel that once these big mutual funds start buying (believe they have started), it can create a lot of short term momentum as those waiting on the sidelines fear missing the boat....market gains momentum until everyone is bought up. My feeling is that the market has a big surge in the short term--much more than people expect. Many traders are going short at current levels and it the buying by funds continues, they will be forced to cover..creating an incredible short term surge in the Nasdaq that catches so many people by surprise. IMHO, last week was nothing. I don't know about the intermediate or long term. I plan to be out when the buying comes to an end. BTW--I am somewhat bearish longer term but for now, I prefer the 4 letter stocks and the QQQs--long. If I was to short anything, it would be the old economy stocks except for energy.

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