INTEL- Money Making Option Ideas for Small Investors Message Board

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Technology Stocks : INTEL- Money Making Option Ideas for Small Investors

INTC 41.50

+5.0%

Oct 28 3:59 PM EDT

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To: IQBAL LATIF who wrote (186)	9/2/1997 8:04:00 AM
From: IQBAL LATIF	of 201

'Is mountain of irrational exuberance replaced by a plateau of rational expectations'? AG's Irrational Exuberance at 6250 to Rational Expectations at 8290-we are long way from early Dec 1996 when Greenspan warned that market is showing signs of 'irrational euberance' we went nearly 2000 points higher from where Dow was when he made the built up of speculative euphoria as central plank of his testimony, however within six months he discovered the virutes of new economy based on twin phenomenon of 'globalisation and technology' and called the market new highs based on 'once or twice in the century phenomenon' of massive permanent productivity gains. Today NAPM number is going to determine if support of DJIA at 7600 is going to be held or not as a broad number this support needs to hold on closing basis if the present first phase of bull correction is to be reversed- the first resistance for me which may be unconventional from others is DJIA close above 8875 on closing basis so that downward direction of narrow hi-low channel of DOW may have some reasonable chance of reversal- for my channel to reverse I need to see a first hike up and a three days of higher hi's and lower lo's- exactly opposite to what market has been doing so far. From today to Friday I think market even on very good numbers will be unable to break this strangle hold on the upside. AG with statement on 'new economy' has helped markets so far- markets understand that Fed Chairman is not going to fight todays economic battle with yesterday's tools, the new armour of AG is a welcome addition atleast one can take heart that minus compulsive obsession with inflation - today's numbers will give AG first opportunity to decide if interest rate hike are at all necessary: In my opinion on TA alone yields on TB's have bottomed we have seen already a move from 117 to 112 back upto 114 and now we may see prices slipping down to 112,15 even 111,21 this supports should hold, DJIA and S&P are sitting on very important supports- 8600 and 899-the way up or down will partially be determined by NAPM what are my readings- The way I read TB's are looking very bearish on charts in yield terms we had a cycle of of yields rising from 6,35% to nearly 7,00% btw Feb and April 97 during the same period we saw market going thru its correction where 770 was a major reversal upwards this reversal came on the back dropping cycle of yields from April 7,00% to end July 6,27% we saw the S&P moving up from 765 to 969- now that cycle of yield is reversed I think todays numbers more will be strong we may see NAPM at 61 or upper range of expectations this is going to be a big jump from May 57.1% - June 55.7% and July 58.6% but what every one is going to closely watch is the purchasers report we had in July an indication of higher number above 50% which means that prices are rising- today if this number is going to be higher then July 53% we will see a sell off in the market- this number if breaks the 55% levels on my charts will show a sign of resurgent inflation and I will expect that 30th Sept meeting of Fed will not ignore this development, a rising US - NAPM price index alongwith lenghtening suppliers delivery time and sharp upward movement of Journal of Commerce inflation in Aug will make Fed move towards a pre-emptive strike at inflation. The chances of this number coming above 55% are based on my following observation: 1-The yield chart is giving me a clear indication of an assault on 6,75-82% level. 2-Advance inflation pressures in Journal of Commerce Inflation Index are indicative of a spike in Aug- I have interpolated the TB's Yield chart and JCII monthly report chart- unfortunately the two indicators give me a clear signal of US NAPM prices taking out July high. 3-M2 was quite strong. Revision of GDP was higher from expected 2,2% to 3.6%. 4- I have also seen progression of NAPM since Jan 94 once this spikes up- it takes minimum of a quarter to head down- From Jan 96 it hit the low and has come upto 53% in Feb 97 where we had first insurance of .25% hike against inflation by the Fed. Only once during last five years period NAPM price index headed down after two spikes up. 5-I will also watch with interest the vendor delivery index a fall will suggest that production bottlenecks are not causing bottlenecks that can lead to price increases. If the number is below NAPM price index is below 53% and vendor delivery index does not indicate any contrary indicator- we will have a rally in dow BUT IT WILL fail to take out 8000 until Friday. We are still 12% higher in valuation from what Fed considers this market to be reasonably priced- but I will wait and analyse the numbers today- a correction to 7400 will make DOW only 6% -8% higher in 6 months considering kind of earning reports we had I will wait until Friday to enter the market after thr unemployment report-PEG of DOW becomes very compelling at kind of levels we expect market can test. I have certain uncertainities going into Friday's numbers- all this will help us to buy our picks at a right price.

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