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

To: John T. who wrote (30953)	10/21/1999 12:36:00 PM
From: HairBall	Respond to of 99985

John T: I am not the one to ask about H&S patterns. They are far to unreliable for me... Regards, LG

To: John T. who wrote (30953)	10/22/1999 1:43:00 AM
From: John T.	Respond to of 99985

They won't let it happen Vested interests will stabilize market By Paul E. Erdman, CBS MarketWatch Last Update: 11:56 AM ET Oct 19, 1999 Commentary Join the discussion SAN FRANCISCO (CBS.MW) -- Conventional wisdom after the close last Friday was that the market would really tank on Monday. Instead, the Dow bounced back 96 points, even though the "news" Monday was no different than it was on Friday. Tuesday, it is moving substantially higher. Again no real news. The CPI came in on target. See story. What explains this? There were good reasons to believe that a further decline might be in the cards at the beginning of this week. First, there were historical precedents. But leaving that dubious reasoning aside, whether or not you want to call it a bubble, after Greenspan deliberately used the "B-word" last week, it was logical that many who looked at the current average 30-1 price-to-earnings ratios could not help but conclude on Friday that stock valuations were out of whack by any historical standard. And that it would be smart to continue selling... But, again, that panic sell-off did not happen. Why? Because there are extremely powerful vested interests in maintaining current market valuations. And these forces are willing and able to step in when it is necessary to stabilize the market. Who are they, and what is the nature of their vested interest? Almost all mutual fund managers. They have to remain fully invested. Their bonuses are at stake. Almost all pension fund managers. For the same reasons. All brokers. Because only in rising markets do they make big money. Most individual investors. They have learned that market timers are losers. Every CEO. His stock options are at stake. As are the options he has offered as incentives to hire, and retain, his key executives and employees. The banks, which have lent enormous amounts of money to the securities industry. I have suggested that we are dealing here with a balloon rather than a bubble. That the air will be let out gradually, rather than popping. When you combine last week with this week, that is exactly what is happening. Because those who have a vested interest in orderly market adjustments also have the superior fire power to make it happen that way. Economist and author Paul E. Erdman is a columnist for CBS MarketWatch. app.marketwatch.com