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Strategies & Market Trends : Shorts waiting to happen

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To: dppl who wrote (646)	9/3/1996 3:24:00 AM
From: Cadaver	of 852

I took a fundamental look at tech stocks over the long weekend. (I'm not actually a fundamentalist, so my observations might not be right.) If one looks at the valuations of tech stocks, most are still overpriced. This may be a short term recovery that's about to end. Some things to note: charts like PRST which simply refuse to die, steady strength in AAPL. Does this mean these stocks have hit some sort of bottom? Is this bottom short/medium term? Are we going to have rotation from some stocks to others? some sectors to others? Right now the following things are uncertain: 1. Interest rates. 2. Growth in revenue for Tech companies. Both look bad for the market right now. Fears of heated economy and uncertainity of growth. Who believes say, SHVA will grow 100% in the next 12 months? Or even MSFT at 40%? In other words my long term fundamental view of the market is bearish. (This does not mean my view of the economy is depressing. Just that stocks are way overvalued now.) But that does not mean we should short now. Stocks can get even more overvalued before another serious correction. So we try to escape the "Presstek effect" which affects those who short too early. So what exactly does all this gibberish mean? What will happen this week? The market has to go up on Tuesday/Wednesday. If it doesnt, (which is more likely) then it will drop to the 50 dma. There will likely be a bounce there. The bounce will cause the bullishness to continue (maybe until December? until next summer?). If there is no bounce, then it is a bad omen since the 50 dma has failed to sustain the current rally. Sorry about the excessive clauses; readings on most charts including naz are not clear. Dow looks bearish. I'm undecided about a menu. Will wait for a couple of days. No trading until things get clear. Cadaver P.S: Signs of distribution in EAGL. Things might go on well for a while (even 2 months) before any serious pullback. BBBY looks ok.

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