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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote (2071)7/5/1997 9:00:00 PM
From: Stingray   of 94695
 
My take on the market is that a lot of things don't add up and these are the questions I am trying to resolve. (1.) to what extent is the public putting more money into the market via mutual funds and (2.) to what extent is the percentage of shares that churn out of the market each year down. I'm looking to explain what has been happening so far this year and I think the flow of money holds the key.

This market is not about value any more. It is about value to extent that when selecting individual stocks fund managers will look for the companies with the best earnings/growth prospects relative to others but on a macroeconomic level the public will not stop putting money into S+P 500 funds just because the earnings to price ratio is less than 5% and we are well into the business cycle. If earnings come in below estimate don't be surprised if the market continues on just as if nothing had happened even though the individual stocks get hit.

I think the flow of money into and out of the market is the key but I need to do some research on this. Meanwhile I think that short covering may have been the fuel for last weeks rally but without up to date numbers on short interest that's pure speculation on my part.

This has become a speculators market. Like every past speculation the bubble will burst, it's just a question of when - could be tomorrow, could be this fall. I'll let you know if and when I come up with something.
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