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

To: Larry S. who wrote (46632)	4/16/2000 12:52:00 PM
From: Return to Sender	Respond to of 99985

Bay Street Beat:Burst bubble prods search for bottom biz.yahoo.com By Sarah Edmonds TORONTO, April 16 (Reuters) - The headlines screamed of ``carnage' and ``mayhem' after fear took the upper hand over greed in the endless struggle for dominance in equity markets last week. Many market experts believe there may even be more ugliness to come after tens of billions of dollars were ripped from Canadian markets in panic selling on Friday. The extreme weakness going into the weekend -- after bearish inflation data caused the ongoing technology correction to spread into the broader market -- bodes ill for Monday's open and margin calls may send shudders through the early days of the week. But after this Pandora's box of dire consequences is emptied and the gung-ho retail investor responsible for the technology bubble learns to deal with modified expectations, there is hope for stability and perhaps an eventual return to an upward path. ``I'm just looking for stability at these levels, I'm not looking for snap-backs. Because any time you've had a snap-back for the last couple of weeks, people sold into rallies,' said Philip Smith, head of retail equity trading for Scotia Capital Markets in Toronto. ``No one's going to push this market too hard but there's a lot of cash out there and the underlying conditions of the market are very, very good.' The Toronto Stock Exchange's 300 composite index finished on Friday with a record point loss of 491 points, closing at its lowest level in 11 weeks at 8473.50. The TSE 300 fell 5.49 percent, its worst percentage drop since August 1998. The index is a hefty 1579 points away from its record closing level of 10,052.68 hit just three weeks ago. Last week alone, the key index shed more than 10 percent. First-quarter earnings period, which starts in earnest in Canada and hits high gear in the United States this week, could smooth salve on the wounds opened by last week's sell-off. U.S. technology heavyweights like Intel Corp. (NasdaqNM:INTC - news), IBM (NYSE:IBM - news) and Microsoft Corp. (NasdaqNM:MSFT - news) roll out their numbers this week, earnings which edgy investors will scour for signs of hope. Canada's tech leaders Nortel Networks Corp. (Toronto:NT.TO - news) and JDS Uniphase (NasdaqNM:JDSU - news)(Toronto:JDU.TO - news) follow next week. Smith also cited solid economic growth and good bond market performance as bricks in the equity market's foundation. ``I think we're still going to still have a good year. This was a big setback, no doubt, but it was almost a required setback to wring the speculative excess out of the market.' Many market watchers, while disturbed by the technical damage done as major world indexes fell through support levels last week, also found the spread of fear a hopeful sign. ``I like it because for a while everybody thought that they were the money manager of the century,' said John Ing, president of Maison Placements Canada Inc. in Toronto. ``That's usually healthy for the market, when greed turns into fear.' There may be more to come but the sell-off in the past few weeks has been bad enough for strategists to start looking for a market bottom. Some say the selling will not abate until investor capitulation -- a complete abandonment of hope -- and perhaps another bloodletting happens. ``Clearly with the Nasdaq down 9.7 percent, it's broken some key support levels here. I suspect any market that ends very weak like this, particularly over a weekend, normally you have to watch out the next day, i.e. Monday,' said Irwin Michael, a fund manager with ABC Funds in Toronto. ``You would need massive capitulation, people throwing in the towel, and I'm not so sure they threw in the towel yet. So I suspect this could continue.' Peter Chandler, senior vice-president at Canaccord Capital, agreed. ``To hit bottom the market needs capitulation, where those people who are extended, (say) 'get me closure, get me out regardless of the cost,' that usually gives you a reasonably good bottom and I don't think we've seen that yet,' he said. Others are more convinced that stability is near and while it will be a hard slog for the Toronto Stock Exchange 300 composite index to push past 10,000 again, positive earnings news should lure some tentative buying back into the market. Ing said technically, Friday's level marked the bottom. ``So this is a stand,' Ing said, laughing a little uncomfortably as he surveyed the massive point loss. ``We should be (at the bottom). At the interim bottom anyway. Definitely we've seen the highs (for the year).'