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Strategies & Market Trends : The Millennium Crash -- Ignore unavailable to you. Want to Upgrade?

To: John Dally who wrote (4474)	9/14/1999 8:51:00 AM
From: JDinBaltimore	Respond to of 5676

I agree - Maybe after CPI (Retail Sales) today cracks will appear in the BULL! We miss you Arik. There is a saying that I follow "When the going gets the most difficult -- SUCCESS is just around the corner. With the top blown off NDX Friday, and rats off a sinking ship (NDX) Monday. A recent article in Barrons about Magellin (AKA Lynch Fund) Raising cash, you have more pieces falling into the puzzle. CPI is now out +1.2 Lets GO with the COUNT! See ya Soon. This Bull is so strong 3 all time highs within 2 months. It's going to be like turning the Titantic. ON WITH THE COUNT! Best Regards JDin Baltimore

To: John Dally who wrote (4474)	9/15/1999 10:21:00 AM
From: Arik T.G.	Read Replies (3) \| Respond to of 5676

JD and JDB, I'm still here, just didn't have any meaningful thing to say. Now I have some things to say. It looks like a horde of economic and technical developments is storming the market. Dollar-Yen exchange rate: See what the Skeptical Investor had to say on that in its August issue: chebucto.ns.ca <Quote> There is a large measure of agreement about the implications should the dollar plummet against the yen and other major currencies. They are enormous and they are dire: as I have repeatedly emphasised the dollar-yen exchange rate is the most critical factor holding together the sick global economy. A plunging dollar will bring down the US financial markets, finish off the floundering Japanese economy, sink China, and in turn bring the whole global economy to its knees. Which is why the authorities have for a long time been manipulating it, intervening in the currency exchange markets time and time again in order to maintain it within some desired range. This policy has been especially crucial in recent months with the ongoing effort to sustain a sort of stasis long enough for global markets to strengthen before Wall Street goes over the cliff. The Bank of Japan spent $35 billion in just June and July attempting to prevent the yen rising too much against the US currency. <Snip> I suspect that a sustained decline in the dollar/yen below 110 will be problematic but not critical whilst at under 100 Japanese exporters will no longer be able to cope. <snip> I have warned before that because these markets have disconnected from economic reality, it does not make sense to use the fundamentals to predict when it will all fall apart. It has been a long frustrating tedious wait indeed. But patience, everyone! The consequences should the dollar plunge are dire. <End Quote> Crude : It almost doubled since it bottomed in February. Why? The lack of a good reason makes the rise more ominous. Higher oil prices will probably have a more pronounced effect on industrial ecomonies (SEA) then on service oriented ones (US), and the best explanation I have for it is early stocking up for y2k winter. Y2k : Whatever happens on 010100, the market is compelled to approach this date from a low level. y2k is one giant uncertainty, and the market hates uncertainties. To use a phrase of Tom Trader: The market is a discounting mechanism. If y2k will produce only minor disturbances, then the market should produce a big releif rally in January. But it has to prepare for worse to be relieved. It cannot just hang close to its all time high and then rally big time on the relief. Technical weakness: 1. Charts The last EW count I posted (http://www.siliconinvestor.com/readmsg.aspx?msgid=11103444) relied massively on the NYSE composite chart. It is still in phase with that market! decisionpoint.com The ending diagonal 3-3-3-3-3 ended on the July top. Furthermore, shortly after the top, the NYA has broken down from the channel it built since last November. (connect the December low with the June low, and January's high with the high of May). Then it rose in August to the same broken trend line and established it's validity by turning south again. That's basic. A broken trendline and a confirmation from below. But the NYSE is only half the story. The NASDAQ composite chart decisionpoint.com looks like those two bourses are trading on different planets, rather then the same country. My mistake was my ignoring the divergences between the NYA and the SPX, stemming directly from the great divergence between the NYA and the COMPX (more accurately the NDX). The NYSE composite is still the heavier index, with 2912 issues totaling $11.7 Trillion market cap, compared to 4845 members in the NASDAQ composite weighing only $3.4 Trillion. (BTW, the total market cap of US stock exchanges has already exceeded 200% of the GDP.) The Russell 2000 has topped over a year ago (4/98) and had a great bear market rally from 10/98 to 7/99. Its chart is looking down again. I cannot see a scenario incorporating a new high on the Russell. The NYSE composite has topped two months ago, and its chart looks terrible, too. Remains the NASDAQ high flyers, mainly the NDX giants (MSFT+INTC+CSCO = 29.37% of the NASDAQ composite index) and the Internuts. I still believe that the RUT will remain a bear, the NYA has already started a bear, and when the NDX will chip in, it will pay big. 2. Recent market behaviour Since Labor day the market is weak. One could expect a two-three days consolidation after the big gap up before the holiday, but seven trading days is simply too much. Then there are the lousy internals, not surprisingly indicating the narrow market (after all the NYA and RUT are already in a bear). The NYA is on T+42 (a bit too late for a crash, but a close in the negative today will rekindle this scenario). SPX under 1280 will break a very long support line and will confirm the bear got to the giant caps. NDX will turn on a dime and will probably be very hard to catch on the way down. The low should occur early December. Probably a sharp decline but no crash. Same target, though, around SPX 900. ATG