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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 688.93

+0.5%

4:00 PM EST

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To: Boplicity who wrote (78529)	6/13/2001 12:00:52 AM
From: t2	Read Replies (2) of 99985

What's you take on the market if this bounce fails to have legs? My take on the market is quite simple. It is a bit of a contrarian to what the chartists are saying. The TA indicates to enough people that ultimately this market goes down...below 2000. Even if there is a short term bounce, the technical analysts seem to point to a break below of 2000 and possibly a retest of the lows. IMHO, we are in a very different market. We are not in a period where the investors want to bail out of technology and move their money to energy stocks. They just wanted out of tech funds that were losing so much money earlier in the year. I think they call it capitulation.<g> That story was played out late last year and in the first 3 months of this year. Remember all those TAs that used to show up on TV in years past predicting re-tests of lows but is just would not happen, that includes a lot of the high profile technical analysts at Merrill etc... and later became the victims of ridicule...by people like Joe Kernan (cnbc). That same type of bearish sentiment has developed recently. The put/call ratio today reminded me of those late March and early April trading days....but this is happening above the 2100 level now. I see 2100 as a new bottom for the Nasdaq market. I just don't see technology investors bailing out anymore. There appears to be no reason to ... in the near to intermediate term. Only a prolonged slowdown could make people change their minds but that is something to be decided in many months. That is why I see only 2 possibilities near term to July: 1. Trading range 2100 to 2300 2. A move upward into 2500 area..especially since it is not expected. All I hear on TV is the bearish case for retests but all I hear in the bullish case is that we are range bound for a while. That is why I see a very good possibility of heading into 2500 area by July earnings. I had targets for at least Nasdaq 2400 by late June but that looks unrealistic given the ability of warnings to keep investors cautious and traders in short positions longer. Here is another indicator I had noticed a while ago and Cramer now seems to put it into one of his commentary. Last year (January to April) we saw a lot of advertising for the Munder Net Fund; this year all I have seen is ads for Munder energy funds. It makes you think. That is also why I dumped almost everything I hold in energy and moved primarily into technology over the past 2 to 2 1/2 months. thestreet.com

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