Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: pater tenebrarum who wrote (23030)	8/13/1999 8:40:00 PM
From: Benkea	Read Replies (1) \| Respond to of 99985

Not a bad call from early August (the opposite of Crawkford): "CATCHING FALLING KNIVES In last weeks commentary we stated: "Our cycle analysis points to a turning point low in the 8/6 +/- 3 trading day time period... while the next week or two could see some further weakness or possibly some choppy sideways basing action, we still feel that new highs will be seen before the year is out, and that the period between now and 8/11 could prove to be a good intermediate-term buying opportunity... Short-term there is important support around 1332 SPX. A break below this level would target 1308 SPX. If 1308 SPX is violated, key support is at 1277 SPX..." Trying to buy dips on this decline has thus far been akin to trying to catch falling knives, especially in the internet sector which has had all the buoyancy of a lead balloon over the last 2 weeks. From Friday morning when last weeks report was written the 1332 SPX support gave way followed by 1308 SPX, and finally key support was tested with the 8/5 low of 1287.3 SPX. Our cycles had called for a top in the 7/22 +/- 1 week timeframe and then a decline into 8/6 +/- 3 trading days (8/3-8/11). We are now well into this cycle window where we would look for an intermediate-term low. This low could very well have been seen at the 8/5 low, but due to continued poor internals we must consider the possibility of some further decline into 8/11. However, since so many bears are expecting a crash next week due to the astro aspects associated with the 8/11 solar eclipse, we think that the market could very well surprise to the upside with a strong short-covering rally. From the 8/6 +/- 3 trading day turning point low our cycles then call for a rally into 9/27 +/- 3 trading days. There are some minor cycle lows due around 8/20 and 9/2, so the next month could prove to be choppy, but we still expect new highs to be seen between now and the end of September. Given extreme oversold readings in momentum, volume, and breadth measures, some of which are the most oversold in several years, we would look upon any panic selling next week as an intermediate-term buy. If new highs are seen into late September we would then look to enter an aggresively short posture, as our cycles suggest that the month of October could be a disastrous one for bulls. So, while the early going next week still holds the potential for further selling, we expect this 8/6 +/- 3 day low will prove to be an important one, at least capable of producing a rally into late September. From a fundamnetal perspective, at Friday's close the Fed funds futures had already priced in a 90% chance of an August tightening by the Fed at their 8/24 meeting, and also a 90% chance of a third tightening at the October meeting. So, the bad news seems to be in the market so to speak, setting the stage for the coming rally phase. However, if the market is right and the Fed does tighten the third time in October beware of the dreaded "three jumps and a tumble" rule that says three rate hikes will cause a TUMBLE in the market. From any new high seen in late September we would expect to see anywhere from a 30-50% decline in the market. So, fasten your seatbelts it could be a wild ride over the next few months." urbansurvival.com

To: pater tenebrarum who wrote (23030)	8/13/1999 8:40:00 PM
From: Les H	Read Replies (2) \| Respond to of 99985

I think it would probably help the market focus on the October earnings. AMAT's earnings report next Tuesday will probably be more important than the CPI unless there is a surprise.

To: pater tenebrarum who wrote (23030)	8/14/1999 9:23:00 AM
From: dennis michael patterson	Read Replies (4) \| Respond to of 99985

PEI-- I just received this: SPECIAL REPORT ON STOCKS (basis S&P Futures, Sept contract) by Martin Armstrong, chairman of Princeton Economics August 13th, 1999 Today's reaction in the stock market, although impressive on the surface, still has not changed the longer-term outlook. A rally into next week may form only a reaction high with resistance at 1357 and 1365 (basis S&P Sept contract). Support should form initially at the 1319 level and a closing back below that level on a weekly basis will signal a resumption of the downtrend. An overall decline into January of 2000 appears likely with a minimum target objective of 1215 and ideal target objective of 987 to 930. We do not expect this decline to be rapid as was the case last year but we do see more of a persistent grinding downward movement for the majority of the period. Problems in Russia, China, North Korea, and India, combined with a high probability of a major financial crisis in Japan on top of Y2K, will keep the fundamental picture questionable at best. In Japan the FSA investigation of CSFP has exposed just the tip of the iceberg of perhaps the worst derivatives loss program in the history of modern financial markets. We now see hidden derivative losses in Japan may far exceed $10 billion. Some banks were using derivatives to meet BIS requirements and to disguise bad loans. An insolvent postal savings fund and the major booking of derivative premiums as current year profits instead of mark-to-market, have left this economy in an extremely vulnerable position. Despite foreign optimism about a possible Japan recovery, concern and pessimism still dominates the domestic Japanese markets. Additional losses arising from the convergence trades in Europe have sparked rumors of billion dollar losses among hedge funds and investment banks. The problems with the convergence trades in Europe have sent the credit spreads into a tail-spin worse than October of last year. All these things combined warn that a serious correction may develop beginning in September. We recommend reducing risk exposure by taking advantage of reaction rallies.