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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: FJV who wrote (30152)	12/21/1999 12:56:00 PM
From: IQBAL LATIF	Read Replies (3) \| Respond to of 50167

<<If you agree that these are the possible scenarios of Fed action, then under what conditions do you believe that the SP00h can break out above 1442 this week? If you see possibilities other than those outlined above, please edify me.>> Franco.. let me thank you for an excellent brief on the market. It does gives me new insight and helps me refine my strategy. I agree with most of your findings but I don't think that extra liquidity is driving markets to these highs. As you have highlighted the rally is limited to very few winners. it is a winner takes it all market, if you go back three years you would find similar players at the core of all rallies, for someone who thought NDX expensive at 1000 on 8th Oct 1998 would find these levels of NDX as unsustainable. I look at the US growth rate and global growth rate, Europe in 2000 is expected to do 3.5% GDP growth and with ASEAN chipping in big we will see that the biggest benefactors of all this would be these very same companies which is driving NDX. it is not that few billion $'s liquidity has raised MOT to 145 $ if that was the case a lot of money makers are languishing, it is the race to own future and that is what is keeping this tech rally going. I have over last four years listened to all kind of arguments but one argument is the most important that US leading companies has major share of global GDP growth. Liquidity based rallies would have lifted all boats, unfortunately that is not so, anyone who thought CSCO to be expensive at 65$ find CSCO at 100$ but the one who owns it at 100 is not ready to part same is the case with most of these companies we do get a lot of selling but the moment we see AMAT at 101 or TXN at 97 or IBM at 107 we get huge buying interest, most of it from investors who want to own part of this success story. Look at the US pension assets nearing 8 trillion $'s now these assets require some long term growth parking and as far as companies offer growth prospects investors are ready to support growth. This liquidity of 50billion injected by AG would be drained very smoothly come Feb and the market would not much be impacted as it is fueled by the 8 trillion $ of pension assets which are long term and unique phenomenon in the investment history of US. It is not the lack of money that is problem the assets are bid higher as we have acute lack of alternate investments of equally potential price earnings growth. I would ideally like that NDX should retrace at least 600 points from here a 60% retracement from 2400 to 3400 move, but so far we only see test of 9days MA and not 50 or 200 days ma, I never ever seen a gap as huge as the present one in NDX and 200 days ma, ideally as i expressed above this should narrow but when I see SOX testing its 50 days at 786 area and bouncing off to 970 in three sessions I look back and only can enjoy my call to go long SOX above 592 break on AMAT NVLS and TER type of stocks, these out of monies are the best way to play. I have very little involved in the market but if I buy NVLS 85?s for few $?s and it is in the money by 30 in couple of days that is a good trade off, but an intelligent investor I have reduced my cash exposure to very little but i play leverage and I know that one of these days I can lose every penny of that premium but I know I have earned it from 2400 onwards as a skeptic and continue to do so wherever my solid supports on SPH like 1398 or NDX 3300 are taken out. I would have been completely pissed off if I had missed this huge run lamenting why this is not at 5000. Intellectual and academic arguments aside market is a totally greedy foolish place and too much intelligence and smart attitudes kills many a investors. I think I like to be an informed investor but ready to take what market is giving me I hate imposing my will or my direction on the market in name of logic, logic has been in the dust bin far too long in this market. The issue for me when I come to the market is to take what market is prepared to give me, although fully aware of the downside I try to get into sectors by shifting gears. I keep looking at opportunity realizing that risks are ever higher but the game we play here is to go and play the bull game with the kind of medicine it deserves i.e. outside the money calls. The risk is less but the attraction is great. I try to avoid into situations where I have to discuss what it should be or what it could have been that is holy responsibility of some permanent whiners the self styled gurus, the story that fall of unimaginable dimensions were spread and patronized by the same people when DOW was at 6000, now these guys would be happy buyers at 8000 on the DOW. MOT at 50$ was expensive now MOT at 145 is naturally a disaster but the problem is that that 8 trillion $ in long term pension funds is not looking for income but price earnings growth like MSFT free cash is utilized to provide internal that in turn provides more tinder to the stock valuation than paltry dividend yield or dividend story. The problem is not that market is overvalued, the issue is that 85% of the market is undervalued, some of the stocks rather trading at far lower than 95, it is the other 15% which needs a 30% correction but the issue everyone overlooks is that this DOT was at 450 just few months back it has seen the correction and therefore it is jumping up, it certainly would go back but the range would be 700 to 1400 may be. Like SOX at 190 was a sell for few at 680 it is naturally a disaster waiting to happen but it is just that the goal post has changes and we can live with new low of 450 and new high of 800 on SOX. If we take out half of the market cap of 4 trillion $ of NDX and expect 50% correction we will be left with a market that has 85% oversold sectors and 15% corrected by 50% the market naturally would jump up that is what happens and in my opinion Transportation, Drugs, BKX and Paper forests and you name it consumers cyclical will take the leadership once this market in tech stops, the market has stretched far too much but when we make new highs the art for a good trader is to extract as much as possible and than leave the train to rotate into more greener pastures. I think if we take out 1368-70 area on SP00H we will see 1230 but that will low of the higher consolidation band, techs can sell but fortunately selling in others oversold sectors make US market a screaming buy and that is what keeps a bottom under this market.. PFE if NDX sells 600 point will be at 28$ a huge buy same with many a stocks like G or T or KO or EK a further 10% makes brkb a good hedge against future inflation and great investment for retirement. I know that when market is oversold 85% broadly, and overbought 15% the 50% overbought correction can only bring a relief rally to the oversold sector. I know it all is simplistic but that is how banal my mind is . Look at things simply and that is how I am going to trade. I am honored you asked my opinion. I assure you that I will love to read your thoughts if you post on this thread. With little time on my hand I find ?Ideas? a great place and thread to exchange views.. I do realize that to write this on a day when FOMC is about to announce is something strangely foolish but good traders have views and nice to express them. Please overlook any inaccuracies but do fill me in with your regular posts..we fools with posts like these have earned nothing but compalints of crazy bulls.. gg