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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 652.53

-1.5%

Nov 20 4:00 PM EST

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To: David Howe who wrote (79741)	7/9/2001 1:09:07 AM
From: t2	Read Replies (1) of 99985

It seems that almost everyone seems bearish on the coming week; that includes myself. I was expecting a very rapid drop below 2000. Now, I am starting to rethink my short term bearishness; no IPOs; deals being announced in a key sector (cable) that can influence the telecom sector as well. Marconi moving to protect itself from a hostile takeover after knocking world markets down in a big way. If the earnings recovery story is not being believed, the bond yields appear to be headed lower. This very bearish consensus that seems to be developing is making me stop and think. Investors seem to have given up on a summer rally. It is now even being joked about on TV business programs. Is this our big contrarian indicator??? Last week we had what looked like an absence of buyers. I would consider that EMC warning to be much more significant than AMD. It just made people realize that some of the big names are having their earnings drop much faster than their stock prices. If the EMC case can be extended to the rest of tech, we are in big trouble. EMC looks to be in bad shape (imho) and may still be on the way down....hardware seems to be in trouble...the companies that sell the expensive stuff. What still gives me hope about earnings is that Veritas software seems to have confirmed numbers for the year..they are the biggest name in storage software. So it can't be a generalization EVEN within the storage sector. We have to look forward to Juniper earnings this week; won't be very good; probably a good put candidate depending upon general market direction. MOT not expected to be good but outlook might be better for this company. The following week is when the stronger tech names report, IBM, MSFT, INTC, VRTS. That in itself may make result in buying ahead of the news or short covering. Bottom line(imho); Unless the Nasdaq drops sharply on Monday, I am going to start betting on it moving steadily higher for the next 2 weeks. If there is a sharp drop, I am going to prepare for a big reversal by mid-week and a rally continuing into next week. The short term bearishness may not prevent a drop early week but should make for a nice rally afterwards. The other factor to consider is whether this cable deal is just the tip of the iceberg in merger news. It has been too quiet in M and A lately.

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