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Strategies & Market Trends : Waiting for the big Kahuna
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To: James F. Hopkins who wrote (22595)7/28/1998 7:33:00 PM
From: donald sew  Read Replies (1) of 94695
 
Jim,

>>>>>>>>>>>> What seems to be coming to me now, is to keep an eye on the small caps. When the money stops rolling out of them and they hit
a good bottom, then internals have the chance of improving very fast,>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

There is some logic in what you say, with the condition that it happens very soon. In a dynamic market as we have now, I would feel that the time frame for such would be only days maximum a few weeks.
It would be extremely hard for the small caps to turn that fast, but it is still possible.

Earnings will be over soon, and if the forthcoming economic news is interpreted poorly by the market there will not be much to hold up the market.

Strange that you mention that there is still money around, in light of the largest outflows of the market last week for 1998. If the outflows continue that also will hurt.

Interest rates are also climbing slowly but steadily. As we approach 5.9-6.0% there will be additional fear. Some were looking for a rate cut from Greenspan last week but did not get it. I think the only way Greenspan would decrease rates if there was confirmation of deflation, but that would also be a strong negative to the market if it also meant a decreasing GDP.

I am not totally convince that 8570 support will be broken but as time goes on and the technicals and market internals do not improve I am feeling stronger towards such. I am pretty much convinced that we will break the 8800(DOW)/1120(SPX) within a few weeks, unless the market internals improve dramatically (NEW HIGHS to get to 150-200 range just to stop the downtrend) within days not weeks.

Seeya
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