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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Chris who wrote (7607)	4/17/1998 6:06:00 PM
From: Robert Graham	Read Replies (1) of 42787

I took a quick look at today's market results and saw that the techs did not participate in this move up by the market. This sector was not on the leadership list and the NASDAQ posted mediocre gains. We still may be in a consolidation phase for the S&P 500. But if the DJIA continues to do well, I think it will have its positive effect on the rest of the market including the S&P 500. I do think the S&P 500 is the key index to watch in this market in order to help determine what the funds are doing with their money: buying into this market or selling it. Over the past several days, I have seen some evidence of fund money moving back into the market. My observation first began with the DJIA which represents both local and foreign money, and now I may be starting to see this with the S&P 500. I still do think Judy is right that the funds will wait for some more key earnings reports to come out with forward guidance before making an aggressive comittment of funds. At least for the time being, the earnings reports that have come out so far I think have allayed market fears of the Asian impact on corporate earnings, where key companies have met and in some cases exceeded their (adjusted) earnings consensus estimate. IMO the funds have been helping to keep the market from a further retrace. After all, they saw a record $37 Billion inflow of new money which they need to find a place for besides the money they have on the side as the result of their previous sector selloffs. I think they started early to place money back into the market in a selective fashion instead of parking it all in cash. But with a surge in the S&P 500 in front of the move up by the DJIA, the funds may be getting more aggressive in stepping up to the plate with their purchase orders during market selloffs like what had happened earlier today. If it were not for the volitility that happens around expiration time, double witching in this case, I would say what I am seeing now is a positive sign. I think next week will tell where we are heading for the near future which may be a continued consolidation. Remember that the S&P 500 has outdistanced the bull run of the DJIA, and now the DJIA looks like it is catching up. Once again I have not been following the market as closely as I would like to, so as usual I encourage any feedback. Bob Graham

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