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

To: Haim R. Branisteanu who wrote (30802)	10/20/1999 5:53:00 PM
From: Benkea	Read Replies (1) \| Respond to of 99985

"Trufflete, IBM is trading below $103." Make that down $12.50 to $100.

To: Haim R. Branisteanu who wrote (30802)	10/20/1999 6:10:00 PM
From: KM	Read Replies (1) \| Respond to of 99985

I have no idea about IBM and have never "called" anything but here's some trading commentary: "I think the best part of this rally is that at the end of the day, the bears are still bearish," said Jon Olesky, head of block trading at Morgan Stanley Dean Witter. "The overhangs the market is dealing with -- interest rates, the Fed, dollar-related and earnings-related -- are still out there. But I think people got to a point where they raised enough cash. We saw some of the bite come out of the sellside and the market lifted on that basis. I don't think buyers are feeling very bullish." Maintaining that equilibrium is "the perfect way for the market to rally," Olesky continued. "We moved the S&P 28% and they're still not bullish." IBM's inline report will present a "wrinkle" for the market tomorrow, but "you'll be surprised by the resolve of the market," the trader said. "I think near-term we've put in a bottom." Over the River & Through the Woods? Like Olesky, a growing number of traders are hopeful Friday will prove the nadir of the recent decline, noting that the market dodged potential booby traps this week, notably the consumer price index report yesterday. "It's possible, [but] until you have the dark clouds of a weak bond market and weak currency removed, you're not going to have a significant move higher," countered Tony Dwyer chief equity strategist at Kirlin Holdings. Dwyer, who recently joined Kirlin from Ladenburg Thalmann, was impressed by the performance of the dollar today but called the advance "an oversold trading rally." Looking ahead, "meaningful upside" will be difficult "until you fix the direction of bonds, which is not going to happen until at least the November meeting" of the Federal Open Market Committee, he said. If the market continues to bounce, the strategist expects investors' "comfort level" will rise. When (and if) that mood becomes more prevalent, Dwyer sees the market getting "smacked down" again, with the Dow falling as low as 9700, with its upside limited to 10,600 in the short term. But the strategist is far from bearish. "In a nutshell, I think the market is going to be volatile," he said. "I don't see huge upside or downside. Earnings growth is going to support the market but the fact you have the Fed in a tightening mode is going to keep the multiple [expansion] at bay." Currently, just 24% of NYSE stocks are trading above their 200-day moving average vs. over 60% earlier in the year, Dywer noted. "Some stocks are down so much, you're seeing signs of bottoms. But they're having a hard time breaking out because you're not getting multiple expansion. [But] long-term, I don't think inflation is a problem. Ultimately we'll bottom and make a sustainable move higher." thestreet.com