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

To: Les H who wrote (34034)	11/23/1999 10:56:00 AM
From: Les H	Respond to of 99985

US TSYS UPTICK BRIEFLY ON WEAK DURABLES DATA; FOCUS ON 2YR CHICAGO (MktNews) - U.S. Treasury prices edged slightly higher following the release of weaker-than-expected U.S. durables data, but gains were short-lived as sellers materialized on the uptick. Prices subsequently moved to near-unchanged levels. U.S. October durable goods orders were reported down 1.3% amid a fairly widespread decline. Excluding transportation orders, durables were down 2.6%, with electronics falling by 15.3% as Y2K creates a buying vacuum. Primary metals declined 0.7%. Durables increases included transportation, up 3.4% and industrial machinery, up 2.8%. Analysts had predicted October durable orders would post a small increase after a decline of 1.3% in September. The October decline "can't be explained away," said Kevin Flanagan, an economist with Morgan Stanley Dean Witter Research in New York. "It doesn't suggest an overheating economy, at least in that sector," he said, but added market concerns about higher oil and other commodity prices are still an issue. The reaction to the data "sort of underscores market sentiment ... any rally is followed by an excuse to sell," Flanagan said. In cash Treasuries, bank portfolios were seen selling 10-years and buying five-year issues after the data release, sources said. That strategy also was seen executed by a European central bank during London hours. Some retail selling also was seen in Dec T-bonds at the 113 12/32 level, traders said. Chart support for the contract has held in the 113 4/32 area so far. Treasury market players also are adjusting positions for the auction Tuesday of $15.0 billion in two-year notes. Some sources now say the auction may go better than expected as portfolios utilize the November two-year for year-end purposes. The December two-year offering will settle Dec. 31. Possible Y2K settlement problems may deter investors from participating in the December auction, they say. As for the November offering, the when-issued two-year is currently about 45 to 50 basis points over Fed funds, not a bad spread "unless they hope for a 6.0% yield," Flanagan said. However, traders say they are now focused on the two-year coming in around 5.96%. The yield on the 30-year bond was 6.183% at 9:23 a.m. EST, compared with 6.203% at 8:05 a.m. EST Tuesday.-- Suzanne Cosgrove, 312-697-9675; cosgrove@mktnews.com >>>The decline in electronics orders should hit the tech stocks.

To: Les H who wrote (34034)	11/23/1999 11:07:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Les, here, yes. imo the perma bulls make the mistake to view the sometimes slightly bearish slant of MDA as an ever-present trait that means we're all perma bears... to me it's only natural to have an overall slightly cautious view when dealing with the most overvalued market of all time. of course valuation per se is not useful for timing short term moves, and even for the longer term has to be seen in the context of interest rates, profit growth, etc. so looking back, i'd say that a certain amount of the market's advance can be justified in the overall fundamental context. however, we should never lose sight of the fact that multiple expansion accounts for a great deal of the advance and that's a direct result of the Fed's loose monetary policy. one could argue that the Fed will continue this policy thus allowing the bubble to continue to expand...that's true to a certain extent, but i suspect that some kind of 'natural' limit to this process will be reached soon. either inflation will finally pick up, or lenders capacity for taking on new borrowings will be exhausted. i wouldn't entirely dismiss claims that equities are accorded less of a risk premium in modern times...but even so valuations look more than stretched. sorry for ranting.... regards, hb