MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 685.66

+0.2%

Dec 5 4:00 PM EST

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To: gem-x who wrote (80256)	7/15/2001 8:20:02 PM
From: t2	Read Replies (4) of 99985

NASDAQ DOW and SPX The chart is a 3-3-5 expanded flat, not a head and shoulders. This could be one of the biggest, if not THE biggest short squeezes in the history of the market. I had no clue that short interest was at an all time high. The short interest is at records on the Naz and NYSE. That was the basis for my predictions of hitting 2400 to 2500 on the Nasdaq by this earnings season (within 1 to 3 weeks). It was also the reason why I was betting on Nasdaq2200 by this past Friday. Unfortunately, after the Nasdaq dropped earlier in the week, it was not going to happen. I had just set a target that was too aggressive for such a short period of time. My basis for the aggressive target that required rapid gains was the short interest and the fact that warnings season was ending. Still looks like Naz 2400 to 2500 should happen. The drops in oil/gas stocks (and other defensive areas) also seems to suggest investor appetite for those defensive sectors is giving way for more growth oriented stocks...that may just be on the verge of a new growth cycle. It is this expectation of a rebound in growth within the next 6 to 9 months that is prompting buying and probably a lack of selling. I would not say it is going to be the biggest short squeezes like the ones we used to get in stocks like AOL, YHOO in years past, but should be enough to push the Nasdaq higher towards 2500 from what looks like a solid base around 2000. Other indicators I have been using are Janus funds that were light on tech stocks as of April 30/2001...that was after the big run up! In addition, I have seem many tech bulls of the past that remain bearish on techs for the near term; some suggesting we have to retest the lows.....a sign that they want to buy some more.<g> Actually, it does not really matter anymore to me whether it hits this target within my forecast date. No difference whether we get a 15% to 20% gain in 2 weeks or 4 weeks. It is basically direction that I am interested in now. There is no way we are going to see retests of the lows, imho. We won't know actual demand at year end but the anticipation of this is what matters near term. PC industry has the biggest impact on semiconductor stocks....wireless also looks to be setting up for 2.5G demand sometime early next year. That is why I believe demand will overwelm supply of tech stocks in the coming weeks. When the Nasdaq short interest starts dropping and fundamentals get worse than they are right now, that would be a time to get cautious on big cap techs. JMHO.

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