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Strategies & Market Trends : Befriend the Trend Trading -- Ignore unavailable to you. Want to Upgrade?

To: David Lee Smith who wrote (13623)	11/19/2000 9:00:39 PM
From: Dave Gore	Respond to of 39683

Yes, the market needs good earnings and easing, of course. But it also wants gridlock to reassure it that the status quo in the markets will continue without messy government intervention, which is what it will have. I was not saying that gridlock was the most important factor. Of course earnings are, but those who think the election is going to drag the market down much further are mistaken. Earnings warnings or Fed tightening could, but not the election mess. Remember, too, that good earnings is a relative term. The main thing is that earnings beat expectations so the big question is "have most companies done a good job of guiding earnings downward to assure positive surprises." I think they have. Remember that when things look bad, they are usually closer to good than anywhere else. I believe that the NASDAQ will be between 2700-4200 over the intermediate term, so that's a downside of 10% and upside of 40% if all goes right. Pretty good odds for success. Check out this analysis. "Others, like Oliver Velez, believe that most of the pain and annihilation has already occurred and the market is ready to move forward. "We're moving historically into the most bullish three-month period of every single year, November, December and January, what people call the Santa Clause period," he says. "I think we are in the tail end of the capitulation now." Velez says as soon as the election mess is out of the way, the market will breathe a sigh of relief and look for any reason to shoot upward. "I think people who start moving into the market now are going to look like heroes at the end of January." Velez describes this scenario in his book, Tools and Tactics for the Master Day Trader. He calls it the "bandwagon theory." Basically, a bandwagon full of people representing the market was so heavy it couldn't plod forward. In the last few months, the people on the bandwagon got knocked off violently. Now, the bandwagon is light enough to move forward in a robust way.