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

To: Benkea who wrote (37027)	1/8/2000 11:36:00 AM
From: Benkea	Read Replies (1) \| Respond to of 99985

Shepler Capital Management: January 10-14,2000 SELL THE NEWS Once again we are reminded of that tried and true stockmarket rule "buy the rumor, sell the news". The Y2K changeover was the non-event of the millenium so to speak, but this "good news" was met with a barrage of selling rather than buying in the first trading days of the year 2000. And despite the strong rebound rally later in the week, some serious technical deterioration was seen in the bellwethers of the tech bubble. The talking heads claim it is only normal healthy profit taking. We would argue instead that a major top is forming for this frothy sector of the market. With next week being option expiration week the "buy the Friday of pre-expiration week" trade suggests the possibility of further short-term rally next week. However, we would not be tempted to "play" any short-term bounces here given the very bearish readings from our intermediate-term indicators. With 4th quarter earnings reports pouring in over the next few weeks that should provide ample "sell the news" opportunities. And don't forget about the upcoming Fed meeting on 2/3/00, which is sure to see at least another .25 point hike and possibly a .50 point hike. The interest rate front remains a major negative for the market, but the "get rich quick" bubble traders don't seem to notice. This puts "bubble boy" Greenspan in quite a bind. After last years LCTM fat-cat bailout, "bubble boy" again played Santa Claus to the hedge fund gunslingers and momentum bubble traders by gorging the money supply based on hyped up Y2K fears. Now the most irresponsible Fed chairman in history must decide whether to let the bubble continue to expand exponentially or to take decisive action to reign in the runaway money supply. If he does not act quickly and forcefully the bond market vigilantes will do his job for him with potentially disastrous results for the equity markets (and the economy as a whole). We remain very bearish on the intermediate and long-term prospects for the market, and are using short-term rallies to add to short positions. (c) 1999. Bill Shepler - You can write to Bill at wshepler@yahoo.com