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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: Kimberly Lee who wrote (19184)	10/18/1999 3:27:00 PM
From: swisstrader	Read Replies (1) \| Respond to of 108040

Great article for times like these... Pre-market Open Editorial Contributed by: Gregory P. Temel Executive Day Trader.com October 18, 1999 - Markets are Poised for a Major Meltdown - Sell Me Your Stock! Enough Already! After a week that saw the already battered DOW take its worst one week point drop in history (over 600 points) thanks mainly to Alan Greenspan's latest market thrashing speech- and a poorly estimated PPI. We simply have no other words to describe our dissatisfaction with the FOMC Chairman's management of the economy and we are simply amazed that it didn't occur to whomever is in charge of estimating the PPI- that the cigarette 'sin tax' and 'settlement' increases were going to hit this latest PPI. Excluding cigarettes (which do not affect everyone anyway) the PPI rose only .3%! The rise in cigarette prices (which by the way was their largest increase ever as well) should hardly be a benchmark for inflation- but alas it is... But just how long can the DOW continue to be the whipping post for the FED and the Bears? Just how long can the DOW continue to flounder while the NASDAQ breaks away with sell offs followed by new highs? After last week, the DOW is now up only a meager 7% on the year while the NASDAQ after losing 169 points last week) is still up over 19% (peaked last week at around +28% YTD). As we had suggested in early September, this latest earnings season was going to bring the money to the growth stocks, and it has. Continued market uncertainty and fear will only cause this disparity in breadth to continue to widen. There will be sell offs, there always are. But now that the DOW has gotten so beaten down, and select technology companies have actually thrived in the face of this adversity, it is soon going to be time for the cash to come back in full force. While it may not happen today, tomorrow or even next week- there is a clear and convincing 'negative' sentiment on the street and that signals BULLTIME. Whenever the mass public gets to state of sheer paranoia, the markets start to sell off rapidly- as we saw last week. But just who is out there buying up all these hysteria based sell-offs? Someone (usually large institutions) is out there saying 'bring me your weak and sick, let me ease the pain and take away your life savings'. These are the people/institutions that always seem to beat the Market. This time will be no exception. Panicked selling has historically proven only one thing- someone is going to wake up in a couple of weeks and see a lot of lost profits staring back at them in the mirror. Once the paranoia ends, prices will rise again in the equity markets. There is no Bear Market, there hasn't been one in over 10 years, if there ever was. A Bear market would be an extended period of declining value and stock prices. What we have had is a Bear 'period'. Those who have been long time readers should look back at our early State of the Market reports where we pointed out that as the market continues to rise, sharp and violent sell offs will only increase in frequency, yet they will continue to get shorter in time. Let's face, NO ONE buys stock with the intention of watching it decline it value. Short sellers don't do, Bears don't do it - no one does it. The entire premise of the Stock Market is to buy stock and sell it later for more money to someone else. Every person's exit point is another person's entry point and time and again we see the markets rise in the face of every possible adversity. Why, because it was designed that way- our entire economic system revolves around the stock market and at the end of the day- we will continue to rise. So don't worry over the sell offs, they will keep coming. Worry about intentionally placed negative bias being forced into the Market- when you can identify that negative pressure, you can identify the right time to enter stocks, again and again. Look for the fear of others to be your strength. Today will likely start off with a technical rebound to the upside. Late trading, however, has the potential to bring out the fear traders again and cause continued weakness as we await the CPI report. Either way, the bottom that would have been confirmed last week but for Mr. Alan G. and a poorly estimated/interpreted PPI- should be confirmed either today or by Wednesday at the latest. If the CPI is not as threatening as the PPI was perceived to be, then Today will be the bottom. If the CPI is market unfriendly (even perceived that way), then we will sell off a tad more a reach a near term bottom by Wednesday. After that we shouldn't have many sellers left. There will be some selling by those that had the fortitude to hold off from joining the panic and will sell into strength, but they will run out within a session or two. Then we go back to earnings focus and a rising market. Come on, let's face it- Martha Stewart and the WWF are going public this week. How bad could it get with those powerhouses coming to town?