Richard, this was recently brought to my attention. I was wondering if you would care to comment on and perhaps offer your own unique interpretation of where you think the Stock Market and Gold is headed:
Split Decision
A Silicon Investor Highlight
By David Zgodzinski
February 28, 2000
Let's not call the market "schizophrenic." I once used that word in a newspaper story to describe a situation that was split, and sharply contrasted. I received an angry email from the mother of someone who suffered from the disease. She criticized me for perpetuating false perceptions and stigmatizing sufferers.
So instead, let's call the market 'bifurcated,' as in "John drank too much tequila and bifurcated all night."
Lately the market has been bifurcating about as much as anyone can remember, and that makes for a lot of queasiness all around. There are plenty of questions but no hard answers. There's lots of talk of extremes and sharp differences in direction. tippet wrote to the All Clowns Must Be Destroyed thread on Feb. 24...
Wouldn't it be neat if the divergence got a whole lot more extreme before the whole market imploded -- it seems fitting: Crash starts from DOW at 7500 and Naz at 5500 ...
There has been a topsy-turvy atmosphere and lots of "being dumb is being smart" talk. It makes sense that when you live in an upside-down world, you learn to walk on the ceiling. Rarebird wrote to the Market Direction Discussion thread on Feb. 23...
The only way to make this split market unconfusing is to accept New ERA to a point. One does not have to agree with it to see its influence and power in today's market. (Personally, I don't think it is going away so quickly until a recession comes.) Otherwise, one becomes a Clown or Preacher laying out a doomsday scenario based on history. I know all the Bearish arguments concerning Valuation. Tell that to all the Tom, Dick, and Harry's who enter the work force and who have 20% of their pay check ticketed for the equity market.
I haven't bought into any New Era philosophy. I've become pragmatic. That's all. Money inflows talk. The rest is BS. Sometimes it takes some depth to get a little superficial.
Some say that the rules have been altered, that this is a new market and those who don't get it, will be lost. bobby beara wrote on Feb. 23...
Since the new miloooniam, haven't you noticed that nyse stocks are having a harder time being in play, i guess they won't buy the internet hype from nyse stocks, unless your a specialty semiconductor or a networker.
dennis michael patterson wrote on Feb. 23 to some of the worrywarts on the Market Direction Discussion thread...
My mantra on this bear-infested thread is "buy the dip." When you buy the dip, you sell the rallies.
Dwight E. Karlsen agreed. When you're feeling sick, buy the dip....
As I've stated b4, BTD is the only sensible thing to do (unless you want to be left out). It will take more than some hand-wringing over Uncle Al to convince people not to BTD.
sandeep related the contrasting mood of the markets on Feb. 24...
The DOW has become immaterial in spite of what everyone thinks. It is the NDX 100 that is the index to watch in terms of bull market. Look at the DOW - it is down 82 points, NDX up 66. Same old, same old...
And Jeffry White took it a little further...
Dow Jones? What's that?
KeepItSimple seemed to remember...
A collection of worthless companies that focus on running actual businesses and making a profit, rather than cooking books and issuing vaporware press releases in order increase share price.
The bifurcating market is sifting and shifting, separating and polarizing. Les Horowitz explained why the Nasdaq is up while other indexes and averages are down...
The Nasdaq is a sector index. Other than a handful of stocks in the retail, cyclical, and transport industries, the rest are predominantly semiconductor, telecom, software, biotechnology, and internet. Other market indices are more diversified or diworsified, however have you.
For many tech stocks on the Nasdaq, there is only one personality and one direction - up. brk wrote to the ASK Vendit Off Topic Questions thread...
There is a huge amount of money flowing out of value funds and into tech this year. It's getting obvious that even the conservative mainstream investors are tired of sitting on the sidelines and watching tech savvy investors getting rich. I'll bet that many people my age (30's) are now looking at retiring before their parents because of new economy investments. ("Hey Dad, how's Bank of America treating you lately?") Would you rather have Buffet's holdings right now or Gilder's ?
In my opinion, the NAZ is the next DOW. What an exciting era to be experiencing.
There are plenty of believers, all right. Basking in the glow of new records for the indexes, shrugging off higher interest rates and the problems of weaker stocks, to some the market looks as healthy as ever. Hutch wrote on Feb. 23...
It's a new born bull market {born in Dec 99}
Options Jerry wrote on Feb. 23...
I went gigantically long yesterday..
He added...
Long is where the action is..heck i have no shorts or puts none..waste of money..the mo-mo is LONG!!!
And there are logical explanations for the high spirits of the bulls and the disappearance of constraints. heinz blasnik wrote about the emotions of the institutional investor...
Value managers are bullish, because they think their value stocks are cheap (some indeed are). they are loading up whenever they can (which is not often, because they get lots of redemptions). tech and growth managers are bullish because their stocks go up (which is a better reason). they also load up on every opportunity, and they can, because the public is incredibly giddy to buy the top, as usual. the last vestige of doubt were the index options...it's gone. the wall of worry has died.
The movements of the market are lurching and mechanical, but the robot concentrates on marching up the hill. michael finsterwald wrote to the Market Direction Discussion thread...
The market feels like one big computer program trade now, outside the little fish the day traders are biting on. Totally mindless action, the computer age has led us to a point where we don't even have to think. In the current cycle of buy the dip, buy the break technical analysis guided trading, we should soon hit NAZ 10,000 as long as the question of valuation can be shelved. I bet there aren't many of those computers that even remotely connect to price/sales, price/earnings, etc etc. none of that matters any more......
But the bifurcated down side of the market is apprehensive and indecisive. There are dark twinges of fear and paranoia. There are bad things happening but it's hard to say why. Peter Futerko wrote to the All Clowns Must Be Destroyed thread on Feb. 25...
It's amazing that new 52-week lows on the SPX is now greater than it was at the worst point during the '98 bear market. The number of market leaders keeps shrinking. There seems to be some flow of money into the smallcaps now, but I don't think that is a positive at this point.
Lucretius Taurus kept his usual frowning vigil...
The herd jerks back and forth with ever increasing changes in direction cause there is no underlying trend. there's just a bunch of traders all trying to guess what the other one is going to do... meanwhile everything continues to drift DOWN... the volatility is getting worse and worse and will get even WORSE
Exuberance is explained away. Haim R. Branisteanu wrote...
No liftoff just short squeeze the funds do it all the time, otherwise they would not outperform. The info is given to them as soft dollars .......e.g where the short positions are.
The twists and turns are dizzying for investors. They look for directions through the fog. They consult compasses and draw lines in the sand, choosing numbers and patterns to explain the entrails and determine their destination. On Feb. 24, John Pitera wrote to the John Pitera's Market Laboratory thread...
The DJIA has not rallied off of it's 10200 base and a decline below 10K on the DJIA would mean a test of more significant support at 9640
jblawson agreed...
Holding Dow 10k is vital to the well being of the free world!! Well maybe that's a bit of an exaggeration but a break here will allow the "organic fertilizer to hit the electric ventilator"
Rarebird chose a different number for the Market Direction Discussion thread on Feb. 24...
Dow 9314 is the key level to hold. That was the peak from July 98. If that is taken out on a closing basis, the Bull is dead. Any decline that holds above the July 98 peak is merely a correction in an ongoing Bullish cycle and should be bought aggressively.
There is bifurcation in the options market. heinz blasnik wrote...
Three times as many DJX calls than puts, and 14 times as many NDX puts than calls....
Gersh explained on Feb. 23...
With the massive amount of Open Interest on NAZ puts, that downside is limited for the time being. That said, the folks that wrote them would like to see a little better retrace than we've seen so far.
But the options trends point to short-term possibilities. jblawson used the past as prologue and projected out further...
I think a recession is around the corner. The inverted yield curve is just one indicator hinting at that. What people also seem to be forgetting is that the Dow has NEVER had an EXTENDED period where it has gone past it's historical average of 12% gains without regressing back to the mean. And that includes plenty of major technological revolutions including the advent of the automobile. A 12% per annum gain from 1991's highs gives a target this year of 8319 (give or take a hundred or so, I was estimating 1991 prices off a log chart). A 12% rise from 1991's lows gives us 7200 in 2000. 12% from the average 1991 price gives about 7500.
Gregory Mullineaux wrote to the ASK Vendit Off Topic Questions thread about one possible resolution of the differences between the climbing and the falling markets...
I tell you one thing, if the DOW goes to 8000, I'm handing in my Naz. card and going big board..
Perhaps this bifurcation is just a matter of timing. People don't react the same way to the same conditions. Some take longer to react than others. On Feb. 25, Riechers showed how the market could be interpreted differently by different players...
Is it possible the Mr. Nice guy, take it slow, nuance filled messages coming from the fed have been subtle but well received by the good old boys from the old economy? Because they are sophisticated enough to read the party is about to end their actions have been manifested in the DOW and other old world companies. The new paradigmers (clowns) have not yet learned the art of graceful retreat and continue racing up the ramp that has no platform at its top. My conclusion is the old money, old economy has already had its ?soft landing? as engineered by Greenie and the clowns are set up for theirs.
As bifurcated as the market is, it can't stay that way for very long. Too much polarity, like too much tequila, is tough on the system.
Discussion Threads
All Clowns Must Be Destroyed
Market Direction Discussion
John Pitera's Market Laboratory
ASK Vendit Off Topic Questions
SI Members Featured
tippet
Rarebird
bobby beara
dennis michael patterson
Dwight E. Karlsen
sandeep
Jeffry White
KeepItSimple
Les Horowitz
brk
Hutch
Options Jerry
heinz blasnik
michael finsterwald
Peter Futerko
Lucretius Taurus
Haim R. Branisteanu
John Pitera
jblawson
Gersh
Gregory Mullineaux
Riechers
siliconinvestor.com
Are there some new developments on your thread? Radical personalities? Hot New technologies? Takeovers? Scandals?
Please let us know. All stories are welcome.
Dave Zgodzinski
PS Richard, you were one of the first persons who came to my mind when I thought of "radical personalities." |
