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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 672.04

-1.7%

Nov 13 4:00 PM EST

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To: bobby beara who wrote (2825)	12/25/1998 12:37:00 PM
From: TA Trader	Read Replies (1) of 99985

I appreciate your analysis and I believe that you are correct in your projections. I too am not sure that we have as yet peaked but if we haven't then we are very close to doing so. The last chance for a nominal new hign in the dow should be by the second to third week of Jan. as we see the final investments of the January inflows i.e. pension and 401 contributions. A few other observations. Tuesday, the 29th is the first day that investors can cash in for 1999 capital gains. I am confident that many are just waiting for this time period to take their gains. At the very least it should put a cap on some of the high flyers with parabolic chart formations (not just internets). I am shorting some in here now including aol! I may have to take some very short term profits on a pullback before the final thrust but it's worth the trades. How about interest rates and their direction. Lately we have seen a significant advance in short term rates and many think that the Fed. will still lower in early Feb. when they meet again. Consider this though. The EURO begins trading in January. Most governments central banks and major foreign buyers of Dollars now have a choice to make. Most if not all will have an obligation to buy into the EURO and this will be at the expense of the Dollar. They will either buy fewer dollars or sell dollars to buy the EURO. The result will be a weaker dollar resulting in higher inport prices here and therefore higher interest rates as this reaction triggers renewed inflationary pressure. Less demand overseas for US Treasury bonds will hammer the dollar resulting in higher interest rates. Not good for the stock market. Merry Christmas and Happy New Year to all. WHAT A COUNTRY!

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