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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 677.48

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Nov 5 4:00 PM EST

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To: exeric2 who wrote (80706)	7/22/2001 5:48:04 AM
From: LTK007	of 99985

Exeric,this is why i like to always attempt to heighten my odds of being right by utilizing factors beyoud TA,and work a mixed brew. I did a 5 year study of the ^VIX once and found out it had a 75% accuracy in predicting a major downside market move in NASD even though it is tuned to OEX^. So i analyzed what went wrong when it failed. It's greatest failure ever was in December 99 it indicated a major downturn and in fact we had the biggest run-up in history,over a short period of time.(i myself shifted to a temporary Bull once NASD broke 3000--the mania was just to obvious by then) Key elements were psychological and monetary and blow out numbers from companies that were getting heavy orders in case of a y2k event. Monetary,greenspan had provided massive liquidity in fear of y2k.Once y2k came and went as a non event,that psychological relief combined with abundant money supply set off the continuance of a run that had begun going into y2k as the goverment managed to get a lot of buyers to come and speculate y2k would be a non-event. And then the y2k overstocking brought forth good 99Q4 numbers,and the frenzy was on. And thus the ^VIX gave a major false signal in December'99. Regardless of what nearterm feeling i may or may not have regards market direction.My overall view remains darkly bearish as i now believe all TA must now calculate the after-effects of a post bubble environment as revealed by U.S. 1929-1933,and Japan following their Bubble. This was a MONSTER BUBBLE and i myself am calculating this into my overall view of market direction over and above simple TA.Thus ends a few random thoughts.Max

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