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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 687.86

-0.4%

4:00 PM EST

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To: Tom Pulley who wrote (83724)	4/11/2003 7:48:13 PM
From: Psycho-Social	Read Replies (1) of 99985

The Fear Factor: I'm just catching up with my indicator updates after being out of town. Currently am about 22% Long Stocks. My working assumption is that the War with Iraq isn't directly relevant to the Stock Market. It's only the War's impact on Fear of Terrorism and Business Sentiment that is relevant. In recent weeks, the Fear Factor (Which declines when fear of terrorism increases, and rises when such fears diminish.) has been rising as the nation gets more confident (cocky?) in its ability to get the best of Arab/Islamic fanatics. The indicator is approaching the January plateau. Since the start of this year, the Fear Factor has shown two effects - a roughly 3-5 day lead, and a 3-5 week lead. I would expect, therefore, that we would see the S&P get over 900, either sooner (3-5dy effect) or later (3-5wk effect). Of course, even the 3-5 wk lead implies that Fear Factor peaks (peaks in national self-confidence) result in unsustainable peaks in stock prices. Longer term, I don't believe our military victories will diminish the danger of terrorism, but for the near future, the Market should bask in a feeling of national pride and security.

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