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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Lane Hall-Witt who wrote (117408)	11/28/2000 1:14:02 PM
From: Dave Gore	Respond to of 120523

Lane, I think chances are 80% that the market will NOT allow a break below 2500 on the close (unless scenario #2 happens-- see below). The market is usually not allowed to get too cheap and fund managers are dying to put piles of cash to work. However, that said, the market is behaving rather poorly right now, with no certain catalyst in the works prior to Dec. 12th. Certainly 2600-ish is very possible though, maybe 50% likely. We could see the following scenarios (prior to Dec. 17th), which by the way, is a crucial date. It is the most important date for a potential catalyst to occur that could propel the NASDAQ above 3,000. Of course that is the date of the Fed. Reserve meeting and make no mistake, it is KEY, KEY, KEY. Signs of economic weakening are continuing to come in, so we could see some good news coming out of that meeting, although I am not as optimistic as some. (chance 60%). SOME POSSIBLE SCENARIONS BETWEEN NOW AND DEC. 17th 1) Market continues to slide on lack of election resolution with no other significant news until we get final resolution prior to the Dec. 12th deadline. The market could easily slide into next week with minor blimps which take us down to 2550-2650. The one rational (but hopefully far-fetched) worry I still have is if that Dec. 12th deadline is somehow breached or if Bush's victory is somehow over-turned and the Florida legislature (heaven forbid) must enter the fray. Then 2200-2300 intraday is possible. 2) Here's the biggest tech wreck scenario. Combine the worst case scenario of #1 (i.e. Florida legislature involvement) with an even greater than anticipated slew of earnings warnings and/or shortfalls in key tech sectors. This is hard to imagine as expectations should be properly set, but this could tank the COMPX hard, which is why trades, especially on the long side have to be quick. And if the Fed. decides to maintain status quo, it could get real real ugly. I don't see all these things happening. But it's good to be aware of this scenario. The Big Boys are thinking ahead and planning, so we should too. 3) The most optimistic side. Major Market players finally decide that a COMPX Market rally is justified and have their expectations set properly for the number and extent of earnings warnings. Plus, they feel that economic indicators will cause the Fed to go to a neutral bias on Dec. 17th. Plus, the election begins to resolve itself early next week when the court rules Friday or more likely Monday next week and kills Gore's chances for good and he concedes. Maybe earnings warnings are even less than anticipated over the next 2-3 weeks. Probably not all that likely either that all these events will occur, but I am more in this camp than any other. BOTTOM LINE The key to a wholesome rally is the election resolution by Dec. 12th and especially a Fed. move to a neutral bias AND most importantly) the strong feeling among major market players that Fed. easing will almost certainly come in the early Spring or late Winter. If the focus of the market turns to Fed easing above all else and earnings warnings are within expectations (AND signs of a recession do not occur), we will be fine and the NASDAQ could even get back to 4,000 sometime in January or certainly mid February if earnings are okay. Look for bank stocks to rally first. As unlikely as this sounds (i.e. COMPX 4000), there is a lot of cash and a panic buying frenzy is not outside the realm of possibility. While all this conjecturing is just that, the moral for me continues to be intra-day trading on trades that are at least 80% certain to go my way. If I am not that sure of success on a trade, I won't pull the trigger. Jenna is right, the surest time to trade continues near the first reversal period at 9:50-10am and the more fuzzy, harder to pinpoint timeframe between 3-3:30 est. Plus there is no point betting intermediate or long term on this market until Dec. 17th, at least in my opinion. That date is crucial.