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Technology Stocks : How high will Microsoft fly?
MSFT 472.22-1.3%Nov 21 3:59 PM EST
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To: t2 who wrote (13708)1/5/1999 5:17:00 PM
From: mauser96  Read Replies (1) of 74651
 
The Dow theory was invented in the days when the railroads carried most industrial products. The theory was that if companies were making a lot of goods and profits the railroads should have lots of shipping volume and profits, so the transports should confirm actions of the industrials. Today the DJTA has a lot of airlines, goods are carried by truck etc. so the underlying theory isn't valid. Despite this it seems to work more often than not. Market breadth means that most stocks are going up rather than averages being pulled by a few big caps. That becomes important if you own small cap rather than big cap stocks. Historically wide breadth ( a good A/D line) has been good for the market. In the last few years computers have allowed big companies to get ever more dominant so the value of this may be changing.
IMHO, since the market is an auction mechanism, the fundamentals aren't important. What is all important is market participants perceptions of those fundamentals. Anybody who has spent much time at auctions knows that one week chinese vases may bring top dollar, and a year later the same quality vases are hard to sell. Nothing typifies the saying that "beauty is in the eye of the beholder" more than the stock market.
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