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

To: Casaubon who wrote (48604)	4/29/2000 12:28:00 AM
From: Michael Watkins	Read Replies (2) \| Respond to of 99985

are you saying the dismantling of the Soros hedge fund is bullish or bearish going forward? Tiger, now Soros -- the removal of these BIG lumps of active capital is not bullish in the near term.

To: Casaubon who wrote (48604)	4/29/2000 8:59:00 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

Casaubon, I( would say that if the two largest hedge funds are in "trouble", there must be many other smaller funds in deeper troubles and we should thus expect even more liquidations. These two may have just been the "shot over the bow". I was asked in a PM why I think that this decline will lead to a bottom at 2950 or so (probably in the next six weeks?), and since these thoughts belong here more than in a PM, I am copying these musings here: "Friday, the Dow broke an important support at 10750, after bouncing from it quite a number of times both on Thursday and Friday. That means, IMHO, that the major trend is still down. Whatever positive influences were impacting the market in general in April and particularly last week (401 k liquidity, good earning reports and last week's window dressing effects), will not be present going forward during May, thus the down trend (the same "external conditions" that overcame these positive influences in April) should reestablish itself in the naz as well. The reason for choosing 2950 as an "absolute bottom" for this leg is that it is a resistance going back to a long period last year. Before breaking through 3000 (on the upside) early last year, the market was bouncing against that level a number of times, and after going through that level, on the retreat last fall, that level was also in the middle of the support area for most of that time (except few daily excursions that did not last long). I am not saying we are actually going to go that low, but that is a potentiality. We have some weak support here at 3850, another support area at 3590 and then the support at the April lows. I believe that we are likely to go lower because the monetary environment (5 consecutive interest rate hikes and more to come) is bad, the rallies that we get do not generate sufficient expansion of new highs, and the volume is declining on the rallies. Furthermore, the basic sentiments are still negative since we never had a single day of a tick above 1000 either in the NYSE or the NAZ since the April's lows, an indication that money is not rushing back into the market and is actually waiting for opportunities to engage in distribution. Friday was particularly telling, with the ARMS index hitting an unusually high value of 1.88 while the Tick was quite positive at around 750 (both NYSE). The high ARMS indicates a preponderance of the volume going into declining stock, while the tick indicates that there were more individual upticks than downticks (and so does the A/D). It may be a new indicator of heavy distribution, I have rarely seen this combination. " Zeev