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

To: Eski who wrote (57031)	7/22/2000 6:26:05 AM
From: ChrisJP	Respond to of 99985

Jeez, Eski, where to begin with a response to your post ? Personally, I think Zeev's posts say all. Message 13483082 Driving the markets up: 1. Current public psychology is to put their money into the markets. March 2000 may have been the top, but the public either doesn't believe it yet, or doesn't know where else to put their money -- so into the market it goes. At this point, just about every wage earner from age 22 - age 55 is putting a portion of their savings here. That's a lot of money coming in every week. 2. Fed Policy -- Consensus is that Greenspan is no longer inclined to raise rates, which implies the next step is to start lowering them (eventually). Consensus is that we will have a soft landing. I'm not saying we will, but that's the consensus. Again, a positive for the markets. On the downside: 1. Lowered earnings forecasts/stock price valuations -- Much to my surprise, the markets continue to resist gravitating toward traditional/historical valuations. I thought it was all over in the summer of 1998. (Hint: I was wrong !) If you look at the S&P 500 index, you will see that although earnings have increased 15% - 20% year over year, the S&P is only up about 7% over the last 12 months. So in a sense, the market has been treading water during the Fed tightening cycle. Not unreasonable to think it will continue to increase 10% per year in line with or perhaps slightly below projected earnings growth. quote.yahoo.com^SPC&d=1ym 2. Low Unemployment/Wage inflation - I don't have an answer to this, unless the "soft-landing" includes unemployment rising back to 4.3% or so. But then -- it won't be a soft landing !! But this won't be a problem for another 9 - 12 months and the market seems to be ignoring it for now, hanging on the "productivity" theme as a way of believing we can have sustained full employment without fear of inflation. Just my thoughts, Chris

To: Eski who wrote (57031)	7/22/2000 10:36:51 AM
From: Crimson Ghost	Read Replies (1) \| Respond to of 99985

My take on tech is to be out at these levels. I would short strong rallies and buy steep drops. A bearish take on software from the BANK CREDIT ANALYST The S&P software index relative to the overall market (and even the S&P technology index), has suffered considerable losses this year, and more pain looms. Microsoft’s stock price, the index’s largest component, has rolled over, and was unable to rally above its 200-day moving average, suggesting further weakness ahead. Several earnings disappointments and warnings that slowing personal computer sales would hurt future profit growth, does not augur well for this sector. Therefore, the relative decline in earnings for the software index should persist. Investors should avoid this sector until value is restored and signs of a turnaround in earnings growth emerge. (