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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 685.66

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Dec 5 4:00 PM EST

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To: donald sew who wrote (5090)	1/31/1999 12:16:00 PM
From: Daniel Joo	Read Replies (2) of 99985

I hate to keep throwing FA in the midst of all the great TA that's being done on this thread. But I wanted to get some thoughts. I use TA as one of the tools when doing analysis and right now I'm getting mixed signals. If anyone subscribes to Business Week, turn to page 34 of the February 8, 1999 edition - "So Much For The Earnings Slump." They took a snapshot of 80 companies' earnings reports for this past quarter and divided the companies into the following sectors - Industrial, Services, Technology, Utilities & Telecom. They found that Net Earnings are up an average of 8% with Technology and Utilities & Telecom leading the way with 60% earnings growth each. Industrials declined 14% and services declined 11%. These numbers confirm what Abby Cohen has been saying all along that some industry sectors will see earnings growth of 50% or more while others are declining. The prblem right now is perception - the companies we are used to following are showing declining earnings. I follow her index forecasts because she breaks down each company on the S&P 500, projects earnings and calculates impact to the index - her predictions for 1999 - DJIA 9850 - S&P 500 1275. In addition, what is noted in the article is that both Merrill Lynch and Goldman Sachs have upped their 1999 earnings forecasts. Earnings show strong growth despite Japan' 3 year long recession - so much for the U.S. catching a cold when Japan catches the flu; despite Russia's economic demise; despite Latin America's troubles especially Brazil; despite SE Asia's economic woes. It looks like SE Asia is turning around, and if Japan can right the ship, if China comes on strong, and if Brazil gets under control, I think that our economy will only gain in strength. Now I know that we are looking at a shorter time frame and that's where TA comes in handy. Since the S&P 500 has already exceeded Abby's 1999 forecasts in the first month - although I don't know if she included AOL in her forecasts - I'm a little more nervous in the immediate future. I still think the downturn will come around mid to end of March and from what I'm seeing from some of your charts that you have so generously posted on this thread, some indicators seem to point that way.

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