When are the markets going to melt? Is the big one around the corner?
INTC IBM MSFT GE DELL role highlighted?
qdog- great question- This is what I think of markets meltdown or the big one?
Subject: "IDEA OF THE DAY"-Trading in&out for profits.
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To: +J.T. (1627 )
From: +IQBAL LATIF Jul 4 1997 11:51AM EST
Reply #1634 of 1634
J.T. As Donald in his previous post has highlighted Indexes are at new hts, but look at the charts last time indexes were at 770 and "Gurus" decided to go short the market and many still are running those positions and a huge 1,87% of total stock issues is the short interest, much as I think that this short interest is not covered this market is going higher, look at the case of ASND one of the reasons it blasted of like a rocket was thar shorts ran for the cover let it take out 55 and you me see it at 60 pretty soon.
When you short a position you don't really own the stock as in case of a long where since you own it the pain threshold is lower but once short goes wrong it kills you, short flourishes on its own momentum, now with a huge short interest in stock market any meaningful decline is only possible if S&P major supports are taken out, the speculatore are not prepared to sell the S&P futures unless stock owners decide to exit for that to happen you need some bad earnings from GE INTC MSFT IBM DELL CPQ, you take these bellweathers earnings as a signal of any decline if 4 out of 5 hit the trarget we don't have a problem but if 3 out of 5 make to the market expectations we are in a decline to 7200, however if 3 out of 5 show tiredness at these levels we will hit 770 S&P pretty quick a nearly more than 15% decline in dow is possible.
I will take a slightly different view from Donald on interst rates scenerio, I think we are in a secular perod interest rates are not going to go higher if AG as yesterday numbers confirm demonstrates that he has once again pulled of a smooth landing of huge conglomerate the USA. I will err on side of optimism here and I expect that is already the case so for me the only unresolved question is corporate earnings, that also although I am cautious, I think I am in a position to expect a decent posting of numbers for now atleast, we are no more looking at beating the market its meeting the market and that hurdle will be easier to cross.
Intelligently most of major surprises are built in the market like GTW and SEG ot DD's slowdown, never before the market run is associated with so much of knowledge based interaction, nearly every investor knows the down side unlike 1987 where the stampede left compelling valuations, now thet possiblitiesof meltdown have receeded, no one is ready to let INTC drift to 110$ or 100$ as holders know that they own the shares of the company which is first class in CPU's
My theory is also based on importance of info dessimination on pshyce of the investor, atleast our thread regulars knew exactly what's going to happen if INTC doen not take out 138$, like wise info has changed character of panic selling even senior fund managers taking a cue not listening to charts, they are selling well below or buying well above the technical sell or buy flashes, in a way they are employing tactics to save there portfolios from seesaw effect. selling
People who talk bearish are people who missed the train at much lower levels, I will be surprised if S&P could not take out 885 resistance in face of uncertainities of last couple of weeks, how it will take out that resistance if we have an evidence of growing unemployment and strong NAPM number, conflicting but a clear sign of non- inflationary strong growth so my deductions are earnings base market will be made or broken by earnings, give me three bad earnings of the five mentioned above I will bet my life that nothing will stand in face of market to reel to levels of 7200 within a month but don't ask to much if earnings are met this market will continue to surprise at these levels ofcourse lot of volatility but range will be top levels. Dow to close below 7600 where it bounced intraday we need a little more than badmouthing.
Corrections for sake of corrections would not happen, this time around market needs genuine reason moreso in face of reduced expectations, if Japanese capital is a captive capital what about pension savings, think of dilemma facing the fund managers if they take the money out of the markets where are they going to invest, the most lucrative now a days is Russia but you need a bullet proof vest to go along with majority holdings or sizeable chunk.
I will cut my entire exposure if I find majority of my 5 acid test companies fail this 'earnings test', let others bamboozle me with surprise earning announcements, I want the primary product leaders and leading conglemorates to meet the market, no if and buts about that, if they fail- I will then only recommend 'exodus', at the moment I am enjoying the ride.
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