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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (25543)	7/17/2000 1:09:45 PM
From: dennis michael patterson	Read Replies (1) \| Respond to of 42787

Caution!! ?? NICK'S PICKS A Decision Point Publication By TraderNick July 15, 2000 Market Overview: Summer time and the livin' is easy. We seem to be in one of those soothing "sweet spots" that occur from time to time. All three major market indexes enjoyed a stellar week, with the Nasdaq and the S&P breaking out above overhead resistance, and the pokey old Dow doing its best to tag along. The Dow was up some 175 points on the week, the S&P tacked on better than 30, and the star of the show, the Nasdaq, gained a whopping 220 points. The Torrents of Spring are all but forgotten. For bulls, it doesn't get any better than this. And that makes me nervous. And when I'm nervous I tend to sweat. Now perhaps I'm allowing myself to be overcome by the heat, and all truly IS well. So let's lie under the apple tree for a while and pluck the petals off a daisy one by one, and see whether this market really loves us or not. The warning season is behind us, and normal earnings announcements are in full flower, the vast majority of them showing in-line, or better, numbers. Next week will feature reports from major technology bellwethers like Intel, Microsoft, IBM, Apple, and Qualcomm, not to mention Dow blue chippers such as Coca Cola and General Motors. She loves us. Earnings parties are great fun while they're happening, but they tend to leave the partygoers with a hangover when they're over. What happens when all the good news is absorbed into the blood stream? It will be three long months until the next party. She loves us not. A fresh binge of merger mania has the market in thrall, with big deals popping up every other day in the telecom, financial, and tech sectors. She loves us. Ever notice how many acquisitions coincide with stock price tops for both the acquirer and the acquiree? She loves us not. With no FOMC meeting scheduled this month, the Fearsome Fed is out of sight and out of mind, and benign economic reports appear to support hopes for a soft landing for the economy. She loves us. The 10-year bond yield index (TNX) is showing definite signs of wanting to bounce off the bottom of both its IT and ST regression channels. The weekly MACD histogram on the index has ticked up, suggesting that rates may be going higher. She loves us not. Technology and financial stocks are back in their customary leadership roles. And even the maligned and mangled internet stocks have been brought back to life by a strong earnings report from Yahoo. She loves us. The rally has pushed the leadership sectors, and the market indexes themselves, up to the tops of their regression channels and into overbought territory. The Dow and S&P both hit ST Fibonacci time lines on Friday and are ripe for reversal. The Naz blew through its last pocket of resistance around the 4073 mark, but the next batch should prove more formidable. A number of big cap techs are almost back to the old highs that precipitated the spring massacre and there are signs that both momentum players and froth are back in these stocks. Last week in my Sector Watch space, I noted similar chart characteristics in the biotech and pharmaceutical indexes, and we saw what happened to them. She loves us not. I'm certainly not calling for the End Of The World As We Know It, but I am suggesting that the coming week and all its earnings hoopla could put a short term cap on this rally and prove to be the summer's last hurrah for a while. In short, I'm looking for some profit taking. In all likelihood, the Nasdaq will hold support at its breakout point around 4073, but that's nearly 200 points below and I don't savor the prospect of giving back everything last week gave us. While voting for the bullish bias proved to be the correct choice last week, a vote for caution would seem to be the smart bet this week.