Roger, I agree with larry that yhoo is not a good short. Technically, amzn looks like it is injured and has made a permanent high. No-one can say that yhoo has made a high, or even how many digits its stock price will be at its high. Yhoo will be one of the last to fall IMO. However, I agree with you that this market has left all rationality behind it. As proof just look at the lowly small cap semi equipment companies. According to the analysts they are going to have a truly dreadful year in '99 and yet most of them are 2-3 times higher than they were a month ago. It is money chasing money chasing money and where it ends nobody knows. I predict it will stop at either 9000 (which means last Friday was the high), or 9300 (whatever the old high was in the summer) or at worst around 10K. I don't know how far the market will correct once it stops but I would guess at least 5-10%. I don't think the market can be stopped by its own internal dynamics- it will require an external shock, probably overseas turmoil, to jerk it back to its senses. If I was Greenspan I would be a little afraid of continuing to ease here. I am sure if he does ease we go up a minimum of 300 and very likely 500 points immediately. The market at the heights in the summer was more rational than this one is because it was basically the superstars like msft, dell, csco, etc that were driving the market up. They had and still have great prospects and great earnings. Now the market is being driven higher by companies like asyt and cien and cymi with horrible prospects for at least the next 6 months.
If the market(makers) really wanted to scare the hell out of almost everybody, especially the small time investor, then a collapse here would do it. But there are too many institutional forces, such as the big boys, the Fed, etc that will prevent that from happening. I could see us retesting 8000 but that is as low as I can see it getting till march or april. Dell's earnings this Thursday and the Fed next week are the last two big boosts the market has lined up. After that, with options expiring in Nov, I could see Nov 23 as the long delayed start of the "correction". Traditionally Nov-Dec are very strong but after this Oct we may not follow that tradition this time. |
