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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: d. alexander who wrote (25366)	2/27/2000 11:43:00 AM
From: j g cordes	Read Replies (1) \| Respond to of 68947

Hi Dorothy, Favor's comment wasn't mine.. but I would concur with this passage in the url you posted. "be prepared for much lower prices over the coming weeks, but very short term we should see some sort of short-term low early next week. We would use the rally which follows as an opportunity to sell at least 25% of current long positions at a minimum. Ideally we would cut back to just a 50% long position. The risk here is just too high. We believe the Dow could see some sort of crash after the next strong rally attempt. Could we be wrong, and we are at the next major bottom right now? Certainly we could be wrong. However, there is only so much risk we will allow" Personally, I've been around long enough to remember how negative sentiment can accelerate prices to the downside.. something we haven't seen for some time. A quick eyeballing of the Dow average shows we're exactly at the 100 week moving average, 200 week would be about 8410. I'd expected we'd go below 10,000 at some point with 9600-9700 as a good bounce area. However, averages don't always mean that much except as volatility targets and who buys averages? So I'll offer a "rational" look at what we might expect. A. Free cash allows markets to inflate, in particular the stock market has benefited from this in recent years. 1. Money supply was heavy going into Y2k as an insurance policy against worry. The Fed promised to take the money out of the system in 2000 and they have been. In addition to that, we've had an oil price hike that has effectively sopped up a lot of free cash. Between the Fed and the Petrols free cash to chase higher Dow stocks has narrowed to free cash chasing growth. This can be seen in the spreading out of the broader averages, the run in the Naz, and the proportionally greater drop in the Dow average. The Dow is at its 100 week moa, the S&P is almost 90 points above its 100 week moa, the Russell is way above its 100 week moa, and the Naz is still in orbit. Bottom line, less free money in the system is pinching towards growth stocks and leaving staid stocks.. this is what people are calling the new vs old economy in the market. 2. Elections are coming in the fall. I believe the Fed through Greenspan (consciously or not..) is over slowing growth in order to be able to ease up a little just prior to election time.. mid to late summer. If they can slow things enough now they may even be able to ease a notch on rates, definitly on the Feds bias. 3. The most pummelled industries will attract capital.. these are banks and airlines. Airlines have a shorter run/cycle so they will move faster, banks will have a longer run. Soon we'll be hearing about how great it is the long bond has eased over the last months, how oil has leveled off and travel into the Spring and summer markets is booming. Jim