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

To: HairBall who wrote (34707)	12/4/1999 1:27:00 PM
From: dclapp	Read Replies (3) \| Respond to of 99985

LG, Great thread...don't give up the ship, Captain!! Here's a weak "contribution" to get us back on track. While many of us "serious/devoted"...um..."investors" have for long talked about bubbles and unsustainable valuations and VIX and put/call ratios and such, this "bubble perception" is now becoming common knowledge in both the U.S. and the world. Greenspan talks about it (or did, anyway). The Economist has a "Trapped by the Bubble" cover. During the recent Republican presidential candidates debate, Senator McCain was asked "Are we in a bubble?" And he said (nervously, I thought): "I think it may be coming to that, yes." (sorry if the quote isn't exact...I think it's close, though). The consensus among Fed "money watchers" seems to be that the Fed is injecting massive liquidity into the markets, in advance of y2k, to ensure that the financial system can weather any y2k-related consumer behavior (or y2k "institutional behavior"? Can anyone help me out with this one?) If this is the case, it stands to reason that the liquidity will be drained after 1/1/00, unless serious problems demand this, or a greater amount, of liquidity. Will a liquidity drain result in a sudden decline in market averages? Nobody in their right mind wants a crash, obviously. (not that we don't love you, Luc...) Can the Fed be adroit enough to create more "reasonable valuations" without spooking investors used to massive returns on their investments (assuming they're on the right side of the A/D line, of course)? Comments? A lot of you folks are smarter than I am! Regards, doug