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

To: Crimson Ghost who wrote (44096)	3/25/2000 3:36:00 PM
From: StockJock-e	Respond to of 99985

The market always acts in a way that will screw the most people as possible in the worst possible way... by that logic I have been moderately bearish for the last 2000 Nasdaq points <g> and have missed out on some big gains. But, last week I found myself finally willing to commit, throw in the towel, get long on all my favorites... (this must be the top). :)

To: Crimson Ghost who wrote (44096)	3/25/2000 3:38:00 PM
From: NucTrader	Respond to of 99985

>>The investment paradigm for this mania really is simple<< Buy the dips? ;-)

To: Crimson Ghost who wrote (44096)	3/25/2000 11:14:00 PM
From: Rob S.	Read Replies (3) \| Respond to of 99985

The trouble with any prediction about this "new economy" market is that the old rules for determining valuations and efficient markets are in shatters. I think "what we have here is a failure to communicate" or rather we are used to thinking about the market in terms of the old rules of fundamentals and money flows. Yes, those things still matter in the long run but they are being dwarfed by changes in the structure of the capital markets themselves that are caused by the popular adoption of the Internet; The Internet allows a tremendous increase in the ease and speed of stock trading and near instantaneous spread of information, analysis, advice and hype. The mood of stock trading on the Internet has been called "Internet Casino investing" - more like an emotional game than life's business. So if traditional factors that have influenced stocks and the market have been greatly modified by the Internet, then how can you analyze it to make profitable investment (gambling?) decisions? One tool I think still works great is technical analysis. In fact, lots of price movement can make TA that much more profitable - big swings make for bigger short-term returns. The beauty of TA is it doesn't care what the hype is or what valuations are - it depends on cold mathematical trends and price movement. ------ I don't have many answers about new tools to analyze "when will it end?". Hard work using careful observation and analysis is all I can suggest. One observation and conjecture I have goes something like this: The stock market has hit lows in the late summer during the past couple of years. During the past couple years, the Internet and high techs have tended to soar during the Fall-Winter months and fall off during the summer months. Techs have traditionally tended to weaken during the summer. Some of this may be due to a down turn in the business cycle for tech companies. There has been a tendency for decades for stock trading volumes to trend down during the summer months. This is likely due to simple factors: people go on vacations, kids are out of school, and Wall Street turns down the volume of the hype machine: fewer IPOs, investment seminars and road shows, etc. My theory is that millions of avid Internet investors spend hours glued to their screens trading stocks during the wet and cold winter months and while kids are in school. When the summer months arrive, these active Investors will spend fewer hours glued to the tube and more time outdoors or vacationing. The net effect is a slowing down in the incredible enthusiasm for stocks. Combine this effect with rising interest rates and many investors may be inclined to "give it a rest" and park some of their money in CDs or other non-equity investments. Money is likely to drain from the most speculative sectors and may rotate into the value plays of "old economy" stocks. The argument may be levied that "not everyone is going on vacation or spending less time investing". True but just say that on average active investors spend 1/3 less time investing. That could create a large vacuum from what the market has recently experienced IMO.