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

To: bobby beara who wrote (51850)	5/23/2000 6:07:00 PM
From: westes	Read Replies (3) \| Respond to of 99985

I agree with everything you say except the following: "The blow-off started with greenie's three rate decreases and set the bubble blow-off in motion, instead of allowing the US to slip into recession and have a cleansing bear market with the rest of the world, now it will be much worse." This is 100% wrong. Had Greenspan allowed the speculation to continue into a recession, we would have had vicious market collapse which would have in turn contributed to the economic collapse, so-on and so-forth ad-infinitum. This is precisely the death spiral that happened in 1929. It is exactly the result that Greenspan wants to avoid. Most people don't realize that in 1929 the Fed acted immediately after the crash to lower interest rates, first from 6% to 5%, then 4.5%, then 4%, then 3.5%. THOSE INTEREST RATE DECREASES DID NOTHING TO HALT THE SLIDE INTO THE ABYSS. The fact is that interest rates are notoriously unreliable as a way to stop recessions and depressions. Interest rates work very well, though, as a way to stop growth. By acting to deflate this market during a period of economic growth before there is significant evidence of any downturn or recession, Greenspan is going to enable a soft landing. I think the worst we get from here is NASDAQ 2000 and a small recession, and I think the odds are against the recession. Our Federal Reserve had a historic opportunity to act in 1928 to stop the speculative crisis in stocks while the economy was turning in good results. The 1928 Federal Reserve failed us, and the cost to our society was something horrific. It took us over 10 years to recover from that ecomic collapse. Japan's Fed had an opportunity to stop their asset inflation during several upward economic movements prior to 1990. They too failed that historical test, and now Japan is having to deal with a 10-year-old recession that only now is showing some distant signs of recovery. The lesson for any student of history is that you can only attack asset inflation during times of growth. If you wait for the economy to correct as a means to handle the asset inflation, the asset speculation will implode asset values, and that in turn will have multiplier effects on the economy which will make the economic collapse extreme, immediate, and uncontrollable. It is in every sense a death spiral, and no matter how skilled the Fed may be, there isn't much that can be done to control it. As long as the Federal Reserve keeps its eye on the ball, this is all going to end up just fine. Our era is like 1928, not 1929. Our Fed is meeting the test of history, and they are acting at precisely the right time, and in precisely the right way. Stocks will go lower, but you can already feel in each of these lethargic declines that there are buyers sitting out on the sides, just waiting to come in at lower prices. This is no longer a panic. A few more hundred down on the NASDAQ and money is going to start coming in. We may not reach a real base for many months until the Fed looks like it is finished, but after the next few moves down, or after the next climatic move down (if there is one), I think this is going to start to feel a lot less like a panic and lot more like a boring sideways moving market, feeling for a reason to go up. That's healthy. We will avoid the abyss (but man, at Nasdaq 5000, we were a lot closer to it than we realized).

To: bobby beara who wrote (51850)	5/23/2000 6:13:00 PM
From: TRINDY	Read Replies (1) \| Respond to of 99985

Bobby--Interesting factoids about the NAZ. All of the top 10 point declines occurred since Jan 1 2000. Four of the top 10 % declines in April 2000. TOP TEN POINT DECREASES DATE POINT CHANGE 04/14/00 -355.49 04/03/00 -349.15 04/12/00 -286.27 04/10/00 -258.25 01/04/00 -229.46 03/14/00 -200.61 05/10/00 -200.28 05/23/00 -199.92(unofficial) 03/29/00 -189.22 03/20/00 -188.13 TOP TEN PERCENT DECREASES DATE PERCENT CHANGE 10/19/87 -11.35 04/14/00 -9.67 10/20/87 -9.00 10/26/87 -9.00 08/31/98 -8.56 04/03/00 -7.64 04/12/00 -7.06 04/10/00 -7.06 10/27/97 -7.02 03/27/80 -6.15