To: Chip McVickar who wrote (142 ) 2/25/2000 1:26:00 PM From: Doppler Read Replies (1) | Respond to
Chip- Let me start by saying that I admire your analysis and grasp of TA. I am a follower of John Murphy, and subscribe to his website. I have also followed several other TA threads over the years and, I have to say, the quality of work on this, and the MARKET DIRECTION thread, is as good and unbiased as I have EVER seen. John P's charts are the best I have ever seen. Personally however, I think that it is almost guaranteed that we slip into the 9200-9500 area on the Dow. A recession would LIKELY put us in the 7500 area, and a depression isn't totally out of the question, which would put us closer to 5K before we take off again. Now for the recession part. Where are we going to get the money to keep spending this way, because values now are based on the assumption that spending/growth continues like it has. Margin debt, consumer debt, and business debt are at all time highs, and I don't mean in dollar terms, I mean percentage terms. With inflation increasing and credit tightening, there just isn't liquidity left to fuel this pace of spending. That means once this pace ends, and it will, there is absolutely no question of that, then earnings go down and these valuations come crashing down. Sectors like beaten down retailer and banking with single digit pe's won't get hurt much, but most will. A rhetorical question- it's 1991 and we are at 2600 on the Dow. Someone comes to you and says I'll give you 7500 on the Dow for yr 2000, will you take it? Most people would have been ecstatic at that and said yes. Why then is it so hard to believe we can fall to 7500? These are only the fundamental and economic reasons we should fall from here, and doesn't even include the technical reasons. Keep up the great work just don't get the blinders on about other possibilities. Jeff
