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

To: Doo who wrote (43988)	3/24/2000 12:56:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Jeffrey, the NYSE members started selling a few weeks ago. the VIX measures OEX put AND call premiums, so it may be that the calls are getting expensive. are we talking about the same poll? American Association of Individual Investors is the one i'm referring to. and the latest one shows the second highest bulls and second lowest bears reading in the poll's history (66/20). still, i agree in the short term, the heavy inflows make these numbers meaningless...they're not timing devices anyway. they only show how frothy things have become and that there is certainly NO fear whatsoever. a few days ago the NYSE 10-day TRIN had one of it's most overbought readings in history btw. (0,70). actually a reading this low has in recent memory only occurred once, late November last year. however, extremely overbought TRIN readings are no guarantee that the market will come under pressure, as they often appear at the beginning of big bull moves as well. but in connection with the sentiment indicators, they show how extremely enthusiastic market participants have become. it's sort of the opposite of a crash, a buying panic where people want to get in at any price. the a/d volume chart for the Dow has accordingly made a much higher new high, while the average itself has yet to do so (a/d volume charts for the other indices are also accelerating faster than the indices themselves). the market actually displays all the characteristics usually associated with a surprise rate CUT. as usual, the Fed has been revealed to be a paper tiger...people complain that the Fed may actually be too tight in the absence of strong inflation data, but that is not true. if one looks at the REAL fed funds rate as opposed to the nominal rate, the Fed has actually not tightened monetary policy AT ALL. furthermore, it still creates money in abundance, only the cost has gone up slightly. it seems they are not REALLY concerned about the overheating economy and market, and since that is obvious to anyone looking at money supply data, the markets keep rising in spite of the baby step hikes. perhaps the timidity of the Fed has to do with this being an election year...if so, one has to actually ask why they risk that a steep price having to be paid at a later stage, just to appease the administration. it was quite revealing that the trade deficit made yet another record high on the day of the FOMC announcement, as it underscored how completely ineffective the current monetary regime is in stopping the economy from overheating. it's a party we all may one day regret having attended... regards, hb