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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 670.92

+0.1%

Nov 7 4:00 PM EST

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To: Doug who wrote (83552)	12/14/2002 6:53:01 PM
From: Tom Pulley	Read Replies (2) of 99985

: World economy, Dollar index, Geopolitics associated with the Middleeast/Islamic countries , a big Budget deficit and a 13 time rate cut by the Fed which has failed to ratchet growth so far. Doug, those are some big problems that could indicate 2003 will be another tough year. And Bobby added the TA support showing that the weekly SPX chart has broken down and has has some strong resistance above. Another viewpoint though regarding the problems you point out is they all appear to be issues that investors are aware of. Theoretically that would mean that those problems have been factored into the market already. For instance, the slowing economy that has become apparent in the last few months was likely the cause of the market decline that occurred in the second and third quarters of this year. So, the question is "are these problems going to get worse than we currently envision?". It is clearly possible that we (investors) can't foresee the economic impact of these issues and therefore the market will decline as the full negative impact of these problems becomes clear. My opinion though (and we all know what they say about opinions)(g) is that the bad news is factored in and just a little good news could give us a strong market in 2003. All that said though, I don't see a good "long term buy and hold" market ahead and I will continue to follow my market timing model which trades in and out every 2-8 weeks typically. Right now the model is 100% cash. I believe I'll get a buy signal soon, but don't have it at this point. Tom

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