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Pastimes : Ask Mohan about the Market
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To: John Hunt who wrote (17087)11/14/1998 8:36:00 AM
From: Crimson Ghost  Read Replies (1) of 18056
 
The latest from Princeton Economics:


PRINCETON ECONOMICS: WCMR Issue #8
Date:
Fri, 13 Nov 1998 20:56:17 -0500


The stock market rallied Friday, closing the week on a strong note. It
could easily go a bit higher into early next week, but we continue to
emphasize caution on the longside. The risk of a huge downside move is
still there. If the S&P DEC contract penetrates 1150 intra-day, you may
see a move to 1177.80, but it is definitely not worth the risk in buying
this market.

Also, it is worth noting that next week is indicated for a Panic Cycle
in the S&P Futures. A Panic Cycle normally coincides with a
wide-ranging trading pattern. We may experience wild swings in both
directions. If the market moves higher on Monday & Tuesday, it could
easily end the week lower on Friday.

Shorting the market is also quite risky until you see firm evidence of
weakness in the market. We were as surprised as anyone to see the S&P
December contract close above 1129.40 on November 6th. BUT this does
not make this a sustainable rally.

In his Annual Seminar our chairman, Martin Armstrong, noted that "the
market wants to go as far as it can go in one direction until your head
spins, then turn around and go as far as it can go in the other
direction until your nose bleeds." We will all have to learn now to
live with higher volatility in the stock market. Our computer models
are showing increasing volatility over the next 4 years.

Picking the exact high of the reaction rally will be difficult, but we
continue to believe that it is not a sustainable rally. The next leg
down in stocks will be a wake-up call for the "Buy & Hold" crowd.
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