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To: Glenn D. Rudolph who wrote (101112)	4/16/2000 1:31:00 AM
From: Rob S.	Respond to of 164684

Hi Glenn and all. As you know, technical analysis, like anyway of guessing the future, is often inaccurate. It is best when events conspire to drive a stock or market to an extreme in contrast to the real news that triggered it. In those situations the market gets driven by extremes of human emotion: fear or greed. The recent down turn in the NASDAQ in particular was driven by both: the momentum to the upside grew to an unrealistic level, factoring in the best possible scenario and then some. When recent news of greatly better than expected earnings has come out for some companies, the stocks moved down regardless. This is anecdotal but I believe an accurate generalization: people I know who have never invested in high tech stocks or funds increasingly have switched money from those boring "old economy" stocks into the "new economy" wonders by this year. What more of a set-up for a collapse can you remember? News about interest rates or rising prices, such as oil, and a report that the Internet was very competitive and .coms are burning through capital were certainly not new, but those and other factors served as the only catalyst needed to tip the market over the cliff. Once started downhill there were just too few investors waiting to get in at the dopey levels many stocks have reached. The market has moved down so much so quickly because most people really aren't so dumb as to really be convinced that companies were worth valuations based on highly speculative earnings two to five years from now. They were in it because of the chance of striking it rich. There have been few stopping points were investors can say "but this company is now earnings $xx and it is cheap. Instead investors are remarking "this thing has moved down 30%, 50%, or 70%, therefore it is cheap in comparison to where it was. In other words, strictly relative to what a "greater fool" was willing to pay a while back. It looks like a lot of fools have wised up quickly. Some industry pundits, usually the same ones who had stuck with laggard "old world" economy stocks, have recently remarked that the tech stock driven NASDAQ still is priced too high compared to "normal" valuations. That may be true but there is some truth to the geometric value of higher growth and higher attractiveness of tech stocks as they remain the drivers of the new age. This brings me down to my observations about where the market is likely to go from here according to technical analysis and other factors: The technical indicators have reached one of those unusual extremes in which it has swung radically "too far, too fast". I believe the market will start a rebound by Tuesday. One factor effecting this is a very high level of NYSE specialist and Wall Street insider shorting that has occurred over the past 2-3 weeks. I assume that the level of general shorting has increased as well (I've done a little myself). The rebound may be surprisingly swift. However, there has been "technical damage" done to the NASDAQ and to a lesser extent the rest of the market. It is unlikely that the NAS will see new highs for at least several months and quite possible it will move down from this level after the rebound fizzles. That would take a couple weeks to a couple months IMO. The best scenario is likely to be a rebound and then some sideways action as a new base is built to spring from as earnings and other developments warrant. Monday may be very rocky as there may be many investors receiving margin liquidation calls. That may drag into Tuesday as well. But I think at this or slightly lower level, buyers will willingly pick up the pieces, cover their shorts, and drive the market higher.