BB -
I use mostly stochastics and Bollinger band for TA. Weekly stochastics should give a sell signal by end of this week. Daily stochastic gave a sell yesterday (Wednesday). However, there is no stochastic divergence, which means the drop may be limited to the bottom of Bollinger band.
The upward pressure has declined considerably. This week, Nasdaq and tech stocks have been keeping up the market. Downward pressure is picking up steam.
I am looking for severe correction sometimes in middle to late January to mid February. That's also the normal time period when tech stocks run out of steam.
Fundamentally, Haim is correct - that this market should a lot lower than it is now. TA has helped me with timing, when to join the bear or bull parties. I cannot wait for those internuts (as you call them) to retest their highs, if they ever get to those levels again. That's the time when I will go all out bearish.
As Haim would say, BWDIK.
More about FA's. FA must be balanced with TA, to get the right entry point and fine tune the timing.
I went to the store today, and saw about 90% of the goods came from China. Every toys, knick-knacks, electronic equipments, sporting goods, shoes, etc, have the label "Made in China". I thought about the ever growing huge trade deficit with China and other Asian countries (plus Canada), and wonder why there is hardly any trade talks or threats of sanctions. Why? In order to keep China's economy afloat, the US is looking the other way and no need to bother slapping their wrist either. Let China send all their goods to the US, to compensate their market loss in other parts of the world, specially in Asia. Otherwise, they will devalue. Can you imagine the repercussions of yuan devaluation? That would be gargantuan impact.
Greenspan and Rubin want the number 1 consumer nation to outspend their incomes and help those economies, and that's what they have accomplished. Where will that leave us?
You bet, most consumers feel great (tremendous!) - the stock market has rebounded and that loss or decrease in equity a few months ago has vanished. It was just a bad dream, a nightmare! Everything is going great right now. Those IRA's and 401K's are looking good!!!! Furthermore, there is more money to spend because homes and cars were just refinanced at lower rates.
Florence Griffith Joiner once said "If you look good, you feel good, and then you do good" I say "You feel good, and you BUY GOODS" Once on a spending spree, hey!, there is no stopping. Why not spend a little more, here and there. Even buy some trinkets, just for the fun of it. Before realization sets in, hey!, let's buy some of those things that one always wanted to buy.
Let's go to January. The big spenders will have credit cards and debts to pay off. Reality will sink in at that time. On top of that, how about those recent announcements of layoffs? How about those mergers of necessity and subsequent layoffs?
What will the stock market attention be at that time, in Jaunary? Could, possibly, the greatest consumers outspent themselves?
Where can they find shoppers when they are already overloaded with feel good Christmas holidays debt? I am afraid the October-December '98 period will be as much a dream as the August-September 98.
At this time, everything is pointing to lower prices = lower margin = lower profit. |
