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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (1857)	12/9/1999 5:09:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 19219

J.T., i notice that on a closing basis, the indices barely advance anymore, while volume is at record highs. throughout the rally from the October low we have seen negative tick, extremely low Trin and ever more deterioration in the internals, like p/c ratios, NH/NL, a/d line... now i'm very much prepared to admit that these things count for little in the face of the Fed-induced liquidity explosion. but i have noticed that very few people seem to worry about the internals anymore, as it has become a widely accepted "fact of life" that they don't count anymore. i can not agree with this. they WILL count again, when least expected. think for a moment what it means to have 424 new lows on the NYSE the very day the Nasdaq makes a new high. it means that shares are being sold in order to have money to pile into the momentum stocks, regardless of their valuations (which everybody can agree on are beyond good and evil). thus the handful of stocks driving the indices higher become what is known as 'crowded trades' as money managers fearing to miss out on their performance all buy the same narrow list. i admit that doesn't give us a clue as to timing the inevitable reversal, but it is a phenomenon that has occurred several times in the past (even though it was never that extreme) and has in each and every case led to sharp downturns eventually. my own view is that the market is creeping ever closer to what may become an important top...the Fed is providing us with the mirage of a free lunch, but there IS no free lunch. looking at the speculative darlings, i get rather frightened...i fear what might happen once the piper has to be paid. right now it's like a casino without the losses...but remember, our financial system is highly leveraged and the big players carry giant derivatives positions. to me it looks almost like the Fed is working toward ensuring some sort of cataclysmic event down the road. i just don't get what they're doing here. sorry for ranting so much.... regards, hb