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

To: Michael Watkins who wrote (40864)	2/21/2000 12:08:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Michael, it comes back to the question posed by LG: will a correction in the glamour stocks set off a rotation into value, or not? in the value arena i do find stuff that i would normally get excited about at current prices... i'm actually nibbling selectively in spite of my misgivings about the market as a whole, especially in stocks that have defensive characteristics (and a history of attracting money when the overall market weakens). one must never lose sight of the fact though that cheap stocks can get even cheaper, sometimes ridiculously cheap. anyway, a rotation would probably contain the panic potential of any further setback. looking at the charts of the individual Dow stocks (most of which look very ugly) many are close to price areas where they have found support in previous corrections. if they break those supports it would confirm for me that the inverted yield curve is indeed predicting a recession in the not-too-distant future. note that the year 2,000 is the first year since the economic expansion began for which economists almost unanimously predicted strong growth at the beginning of the year. this is a big contrarian red flag. a recession would probably be discounted in the market with a 6 month or so lead, in the form of a severe decline.