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

To: Dan Spillane who wrote (33809)	10/21/2000 1:06:35 AM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 42787

>>Why do you "have to" have capitulation, and the way you want it?<< I don't have to have it the way I want it but I do pay close attention to past tendencies and trends. Bottoms generally come in two types. Capitulation and long base building. Neither of these scenarios seemed to occurred this week. While on the candles, some may be able to argue that Wednesday appeared to be a hammer bottom and capitulation day, the intra day doesn't look like one IMO. AS I said, capitulation bottoms tend to dive and each bounce attempt is met with more selling until finally the bears are exhausted, selling dries up and then it bounces up with the entire ordeal lasting hours or a full day or two, not a half hour. The other type of common bottoming pattern is a drop to a level where interest disappears and it gets stuck in a low trading range that just grinds on and on until shorts cover, longs give up and everyone just waits for the next move to see who blinks first. Hard to describe but something like what QCOM did a little while back or any of the stocks that sold off a couple years ago to 18 months ago before bouncing back last fall. It tends to be a broad base building as longs cautiously buy back in in small amounts and add as confidence rebuilds until the break out that gets everyone jumping back in. There have been instances of bounces like this week, but they are rare and my belief is that this current market environment and fundamentals don't support such a move. Sure we can move up a bit more and we could grind sideways a bit longer than I expect, but I would not bet too heavily on it. I do have a few long plays here and there. I am simply cautioning against getting too caught up in what possibly could be a bear trap. >>Capitulation is based on stupidity and fear, not fundamentals.<< Exactly my point, Fundamentals don't support a rally here at this time nor the valuations many of these stocks that are moving command. The debt default risks, strong dollar hurting international sales, rising interest rate environment, lack of personal savings, record private and corporate debt exposure, obvious earnings and margin slowdowns, rampant accounting gimmicks and uncertain direction of technology changes makes this a bad time to trade stocks on far out projected earnings estimates. PPI and CPI came in hot, the initial claims for unemployment came in low once again this week, and housing starts didn't show any hint of a cooling economy. Greenspan is going to be stuck between a rock and a hard place as there is plenty of evidence more tightening is needed yet he has to fear tripping up the markets too much. Fundamentals are screaming caution yet bulls are still whistling past the graveyard tossing dollar bills like rose peddles on the ground unaware Freddie Kruger and Jason are waiting just past that tree up ahead. -ggg- Good Luck, Lee