Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: el paradisio who wrote (49519)	5/6/2000 9:12:00 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 99985

el paradiso, it all depends on how deep the next move down will be. If we stop on the DOW, as I expect, no worse than the 9100 area and in the NAZ no worse than just under 3000 (2950), the next rally (a summer rally starting early?) would start with overall sentiments quite bearish and from prices sufficiently low to create a monster. Here is my rough timing rationale. I am assuming that indeed the next two weeks are going to be as weak as everyone here suggests. I should add that this uniform opinion starts to put in my mind a big question mark on these assumptions. The stage: Sometime before or after the 16th of May (I have May 18th) assuming the fed raised by .5% we get a climactic "melt down" that gets the DOW near 9100 (or at least marginally under the February low of 9730) and the NAZ to 2950 or so. If this low is accompanied by extremes in VIX and the ticks gets below about -1400, we can set the stage for a very strong but short (one to two weeks) reversal, followed by a retest that does not even get close to the lows (probably stopped by the lows in April for the NAZ and the March lows in the DOW if these were taken out substantially during the rally, if these are not taken out then a summer rally may be a dream <G>). By Mid June we should start and get a stream of pre-announcements that are going to look positive, and if you think that Barron's article this week about CSCO is going to dampen enthusiasm for CSCO, you forgot that Barron's has been a contra indicator for some 20 years now. During July, the combination of actual stellar quarterly earning reports and injection of additional funds from abroad (the increase in rates should make the dollar strong against the yen, particularly if we see a slight improvement in the trend of our trade deficit, which i expect). This will be combined, IMHO, with first signs that the last eight rate increases have a modest impact on the economy, but not "damaging", leading once more to "goldilock" scenarios being touted. These musing should get us through August with modest gains and get the market psychology to forget the recent horrors, and since i still expect to see excess liquidity, paper assets inflation could continue till election or so. I still have a possibility of the Dow at 13500 or so before year end and the NAZ making a marginal new high before we enter a lengthy bear market next year. Of course, many things can go wrong with this "scenario". We could have actual failures of some larger hedge funds, banks starting to write off bad debts, etc. But I do not see the economy "falling off a cliff" anytime soon. The trade deficit could continue and grow instead of abating, causing the dollar to fall apart (and go under 100 yen/dollar, but I do not see this likely before year end) etc. But for now, I'll stick with my post May bullish scenario. Zeev