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

To: James Strauss who wrote (44943)	4/4/2000 3:33:00 PM
From: Les H	Respond to of 99985

US STOCKS PLUNGE; TRADERS SAY DECLINE ORDERLY BUT MARKET SHAKEN 14:00 EDT 04/04 NEW YORK (MktNews) - U.S. share prices plummeted Tuesday amid strong downward momentum that reflected the degree of upward momentum much of the market enjoyed earlier in the year. Despite the losses, dealers said trading was orderly and spreads between bid and ask prices relatively stable. Nevertheless, as always during a sharp retreat, participants were shaken and surprised at the speed of the selloff. Dealers and analysts dismissed talk in the popular press that margin calls are a significant factor behind the losses. Fund managers have reported no signs of panic among small investors, while dealers said institutions remain solid. At 1:44 p.m. ET, the Nasdaq, down 352.90 at 3870.78, and the Dow Industrials, down 172.81 at 11049.12, were both off their session lows. "The real disturbing event today is that money is not shifting into Dow stocks and vice versa as it has until now, but instead is going into the bond market," said Art Hogan, chief market analyst at Jeffries & Co. Short-term bond yields were sharply lower, with the one-year yielding 6.05% vs. 6.19% late Monday, with the long-end also benefitting. At mid-afternoon, the 10-year was yielding 5.85% vs. 5.96% yesterday. Hogan said the steep declines, especially in the Nasdaq, are masking the heavy level of profit-taking in the market, a factor which lessens the degree of pain as well as the degree of risk in the market. We "must remember," he says, that year-to-date both the Nasdaq and the Dow are still higher. Comparisons at mid-afternoon show the Nasdaq up 44% from April 5, 1999's close of 2560.06 and the Dow up 9.1% from 10007.30 at the same date. Dealers and analysts attributed the declines more to a shifting of momentum and not to any single event, such as the antitrust finding Monday against Microsoft [MSFT], down 3 11/16 at 87 3/16. "Microsoft might be an excuse, but it's the market itself that is responsible," said BT Brokerage head trader Jim Benning. "Valuations were sky-high, people were worried about the Fed and higher rates, the collapse of Tiger Management -- it was a lot of things," said Benning. Dealers and analysts expect the selling to continue through the remainder of the session, with bargain hunting possible, if not likely, at the opening bell Wednesday. "People are taking money off the table now, but it may begin to come back tomorrow," said Benning, who likewise stressed that much of this session's selling, despite its magnitude, remains profit-taking.