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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: Poet who wrote (6527)	4/16/2000 4:41:00 PM
From: Jill	Respond to of 8096

SOme interesting stuff from the market direction thread. 1) from bullmarket report (not the best source, but what the heck) - bull-market.com THE BULL MARKET TECHNICAL INVESTOR April 17, 2000 Volume 1, #4 "Off The Charts" By Barry Habib and Art Adams. Every week will give you an update of performance results and holdings. We certainly picked a heck of a week to launch a newsletter! In our three editions this past week we made 13 selections. Two never reached the entry points we wanted. The 11 selections that we did trade have either all reached the targeted price, causing us to exit the position with a profit, or had hit the protective stops, causing us to exit the position with a loss. Therefore our position is 100% Cash at present. Performance to date is a loss of 1.7% after our first week. While we are not pleased about posting a negative result, it compares very favorably to the major indexes (Nasdaq down 25%, Dow down 7%, S&P down 10%.) This reinforces our conviction that Protective Stops are a must. It also shows that there are profits to be made in a down market with "Short" trades (selling before you own the stock). We made huge quick profits on all three of our short plays last week. This was just an awful week for the equity markets. We thought it would get bloody once the Nasdaq fell below the support at the 200-day Moving Average (MA), and that's pretty much what it was.bloody. The stronger than expected Consumer Price Index Report could not have come at a worse time. These are indeed very trying times for the equities markets and especially the Nasdaq, the market for the 21st century. There has been tremendous upward momentum in the Nasdaq since the middle of last October until the recent peak on March 10th. Now that same momentum has reversed and is headed back in the other direction. This has been a case of "momentum up, momentum down." Friday's trading was certainly not a confidence booster as the Nasdaq Composite Index continued to drop precipitously the last hour and closed poorly. The Index ended the day down 355 points and well below its 200-day MA. If the market fails to stabilize, then the next level of support would be in the range of 2,800 to 2,500. If we were to pick an exact support number, it would be 2,632, from the low registered on October 18, 1999. Margin calls are forcing many people to liquidate their portfolios causing excessive selling pressure and leading to a vicious cycle of selling in a rapidly collapsing market. We expect more margin calls on Monday. Fund managers are also selling holdings to raise cash. Market psychology has done a 180-degree turn, confidence has been shattered and the result is panic selling. Hopefully, we'll get the last of any shakeouts out of the way early next week so the repair process can begin. Keep in mind there has been a tremendous amount of damage done. From this year's high to today's low, the Nasdaq has lost 36%. In order to get back to this year's high recorded on March 10, the Nasdaq will have to rally more than 57% -- a difficult task for any market. Warburg Dillon released the following information today pertaining to Nasdaq bear markets. Year Decline Mos. to Recover 73-74 59% 48 Oct 87 35% 20 89-90 33% 7 83-84 31% 18 July 98 29% 2 So what do we do? Is this a buying opportunity or a real decline and bear market? Stocks are severely oversold, which makes it difficult to find short sale candidates. However, this doesn't mean that it's time to step in and bottom-fish for bargains. Often, an oversold condition becomes even more oversold. If you try to go short, you're at risk from a sharp rally from an oversold condition. If you try to go long, panic could set back in, and stocks could drop even more. Although there were a number of blue chip technology companies trading higher in the after hours session on Friday, there is no guarantee this will carry into a stronger opening on Monday. In fact, we believe there is a high degree of probability there will be more downside to come at the open on Monday. The real problem is, even if there is a bit of a rally, traders will probably use it to sell into strength. With that said, be very careful when trying to make any trades, or take a day off and do nothing. 2) From a post there: Christopher Cadbury's Market Fax 401 E. 74th St., New York, N.Y. 10021 APRIL 10 ~ Heavy specialist shorting has continued for a second straight week and many indicators have become bearish. On Friday the NYSE reported that its own specialists accounted for 52.7% of all shorting volume on the exchange during the week ending March 24, which was the second-highest level of the past year. A week earlier, the specialists had been responsible for 54.3% of all shorting volume, the highest level in several years.