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

To: Matthew L. Jones who wrote (31136)	10/22/1999 9:51:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Matt, good argument...however, buying value in this market has been a losing proposition for quite some time now. i'm not sure if the value stuff will recover concurrently with a break in the overpriced stocks...more likely it will get even cheaper before turning around. otoh, i agree with you that some stocks look extremely cheap on a relative basis and one is tempted to look for them bottoming out. as for the 1% EMA, as Vitas has pointed out, it is more likely to bottom in the vincinity of -100 (the '57 low) in the course of a final washout. in a true relentless bear market it can go a lot lower...look at the 1930's bear if you don't believe it. liquidity? the Fed is starting to drain liquidity from the system, both by raising rates and through open market ops. of late. rising interest rates may well begin to cut off the second biggest source of liquidity, namely corporate buybacks, which are largely debt-financed, much to the detriment of corporate America's balance sheets. a falling dollar may curtail the biggest source, which are foreign funds. individual investors rank a distant third as a source of liquidity, and last i heard they are maxed out on mortgages, credit card debt, and margin debt. last but not least rising yields on riskless treasury bills and only slightly riskier notes and bonds are more and more looking like serious competition for stocks...as i have mentioned before, at some point there is a cut-off that may lead to sudden asset re-allocation moves being enacted. a first whiff of this was evident last Friday... let me conclude by saying that i do see your point and i have begun to nibble on some value stocks myself...with the result that i now realize that i shouldn't have<ggg>. they will come back, but it will require a lot of patience imo. we can agree on one point: the next major rally will likely be led by value. regards, hb

To: Matthew L. Jones who wrote (31136)	10/22/1999 10:50:00 PM
From: HairBall	Read Replies (1) \| Respond to of 99985

Matt: Nice post. However, some of us on MDA have been saying much of the same thing for months...<g> That is one of the reasons I have keep posting the Value Line Geometric Charts. Some on this thread have posted about the A/D line since last year. And some on this thread have posted about the narrowing of the number of issues leading the indices up. And some on this thread have posted about value stocks. So, while I am glad you have come to this realization and have begun to see the "big" picture, several on MDA beat you to it...<g> I am not sure what will be the next mania, but their will be one. However please be aware, just as the glamour stocks have influenced sentiment on the way up, they will influence sentiment on the way down. As, always timing one's allocation shift will be "everything". To All: Personal business took me away from the Markets about mid day yesterday. Hopefully I will be back full time by Wed or Thur of next week. I have managed to scan all the posts on MDA. A lot of good contributions as usual. The bearish rising consolidation patterns on several of the major indices have required adjustments, but they are still in effect. Major resistance came into play near the close today. I will try and post some charts and analysis later this weekend. I have been working on a new combination chart that will hopefully shed some light on where the Market is now! Have a good weekend all... Regards, LG

To: Matthew L. Jones who wrote (31136)	10/22/1999 11:11:00 PM
From: Les H	Respond to of 99985

The advance-decline oscillator(s) and high-low oscillator(s) do the same trick as using a 10-day EMA of the A-D, etc. There are several A-D oscillators that you can graph frome the following page. marketgauge.com The New High-New Low oscillator just turned positive after today. Last two rallies in the Dow/SPX/NYSE, the oscillator only turned positive for three days or so. It's lagging badly due to the seasonality of the new lows list, i.e., September-December. Another interesting tool provides advance-decline by sector and industry (see bottom right): financialweb.com Unfortunately, they don't chart the data. The finance and natural resource sectors had the best breadth today at 3-to-1. Normally, you don't get those two to move together, but with the Banking Bill.