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

To: Greg Jung who wrote (28233)	10/3/1999 12:55:00 AM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 99985

Too earlyto tell and my trade on the sector was purely a technical one. My system gave a mechanical signal and the chart had promising patterns so it was just a scalp. I will lay off and watch from here since it wouldn't surprise me to see it come back down just as quickly as the other bounces have in all sectors the last few weeks. I really feel that AG should raise but as I thought about it all day today, it occured to me I doubt he will for one reason and one reason only. The market has managed to go flat to down for a multi-month period the first time in 17 years. Ag Warned the street about irrational exuberance, scared them with threatened actions etc all to no eval. Now he finally has the street's attention. If he raises, the street will drop the market but then it will most probably spinit positive saying he is done for the year and the nuts will go up another 500%. However, if he does nothing but warns they are biased toward tightening, the street may bounce for a few days but thenit will go back to pins and needles as each economic report is released and we will keep our sideways bias. Therefore, I think he cancontrol the market better by doing nothing but going toward a tightening bias than he can by actually raising rates. The million dollar question is how to trade it. Do you go long for the initial pop or wait for the pop then play the drop? Heinz, as for your employee layoff scenario it is a good question. Will the new un-employed help the tight labor market or will it drain liquidity out ofthe market since there will be a lot of people with less cash to put in this oversized Casino we call a market? I think a lot depends on the numbers we are talking. I know a few of the IT companies I follow closely have been laying off heavily for the last few months as contracts are slowing dramatically. The problem is there aren't enough lay offs to help the labor market since I believe this is no longer the tight sector where people are needed. On the other hand, is it a large enough force to even have any impact on the market? I tend to think not. It may be a mute point. Just for Gee Whizes, someone here mentioned that AG had not prepared the street well enough for another rate hike. Wouldn't it be interesting for him to say no raise but a tightening bias, then if the market took off he did a surprise hike like when he saved the market last year except this time it had the opposite affect? Late October does have a cetain well maintained batting average <gggg> Good Luck, Lee