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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Hans who wrote (17820)	6/18/1999 4:42:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Hans, i do think this rally is for real...there will be bumps along the road, but the benign CPI data and relatively harmless AG testimony have clearly led to a shift in investors' psychology. i remarked in one of my recent p/c ratio updates that we would have to judge the market by it's reaction to 'friendly' data. since the CPI inspired rally didn't fade, i concluded it was safe to go long. this view is supported by the skepticism shown towards the rally by option traders. also, the most recent low before the market turned around was a 'failure low', higher than the previous short term low and accompanied by a bullish a/d line divergence, which made a lower low. i noted also that e-wavers have adapted their counts to the new situation and generally have revised their outlook to a more bullish stance. the NDX chart formation now looks like a big bullish contracting triangle instead of the h&s/rounding top one could have seen before the recent advance. last but not least, some leading stocks have decided they want to go up. MSFT has broken to the upside from a saucer-shaped consolidation period, and this stock has often been a leading indicator for the market as a whole. semiconductor and phone equipment stocks look quite good, there's an island reversal on ORCL, IBM is closing in on a new high and the nutz have stabilized for the moment, in fact showing more resilience than i expected (although the larger picture on the nutz still points down, for that to change, they would have to go back above their 50 dma's). i was very cautious on the market before the CPI data and a major concern for me was the dismal performance of the long bond. this concern has been removed for the short term, although i think the bond may attempt to revisit it's recent lows before a more permanent turnaround. this would constitute the aforementioned 'bump in the road'. i have long held that this market would enter into a blow-off stage at some point, and we may well be at the beginning of same. sometime later this year i expect the market to tank in a major way in a belated reaction to the Fed's tightening and mounting Y2K concerns. regards, hb PS: i wouldn't touch e-bay with a ten-foot pole, except to short it at the top of it's range. i know it's one of the few profitable 'net stocks, but the valuation is beyond ridiculous and one day people will wake up to this fact.