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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (2090)	6/8/2000 10:12:00 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Heinz has given me permission to post a couple of his PM's to me from today. He makes some cogent points regarding potential storm clouds on the horizon. Since he lays them out pretty well I figured I'd just post them for Us. --------------------- John, i believe we're getting close to the next sell-off. perhaps some backing and filling first, with a slight upward bias, and then the next really painful sell-off comes. my sentiment indicators are all in the danger zone again...there's too much bullishness. however, once these indicators give the alarm, it often takes a little while for the effects to be felt in the market. i shorted e.g. the NAZ and various i-nut stocks about 8 or 9 trading days too early last time around based on the same indicators. in addition to these indicators waving a red flag again, we have an increasingly hostile monetary environment world-wide. ECB just hiked by 50 bps., and i suspect the BoJ will be the next CB to hike. it feels to me like the party's over, and the markets just haven't realized it yet. ideally the current momentum will carry the market a little bit higher still, that would create a great shorting opportunity imo. regards, hb Thursday, Jun 8 2000 3:04PM ET To: John Pitera (who wrote) From: heinz blasnik John, also when one looks at intermarket relationships, several markets appear to be subject to dislocations. credit spreads, the recent strong moves in currencies and commodities, etc. all point to a system increasingly under stress. the rate hikes around the world certainly play a role in this. remember, the big derivatives pyramid hasn't been stress tested yet (although '98 was a good opening volley) in the sense that the immense build-up in notional values is a phenomenon that occurred concurrently with the long economic expansion, and hasn't yet had to perform under recessionary conditions. private sector leverage (corporate and household) in the US is immense...a period of deleveraging would not be good for stocks. note also the recent exit by several savvy big players, like Robertson and Soros...quite possibly a warning sign for the intermediate term. regards, hb Note: the italics and bold parts were done by me and reflect what I consider to be some of the most significant things we should be considering. John