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Strategies & Market Trends : Market Gems-Trading Strong Earnings Growth and Momentum -- Ignore unavailable to you. Want to Upgrade?

To: Jim Cash who wrote (5586)	3/1/2001 7:55:31 AM
From: Jenna	Read Replies (2) \| Respond to of 6445

Jim, I feel the transition coming however I think its a temporary release and not a permanent reversal of the downtrend. Perhaps another bear flag rally. Intraday it is easy relatively easy to short, taking home is harder and puts on a few companies with expensive valuations is the answer at least for a while. The same transition is on the long side but its much harder. During the session LONG plays turn aggressively to the downside and its even more scary to take those home so if you think of this in CANDLESTICK imagery. The long side intraday is like a hammer appearing on a downtrend, namely every day has the potential of a reversal, but instead of getting a confirmation the next day with a white candlestick whose body opens above the close of the previous candlestick we get either another hammer or worse a black candlestick and so it goes on until we have a congestion band on the long side and no one is willing to get long in a market that is 'congesting'. The short side is tenuous if you get a large black candlestick with hardly a shadow coming AT THE BOTTOM of an extended downtrend, especially on high volume, you are afraid it is the capitulation sell everyone is waiting for so you have a problem here as well. So even if you do well with this wide bodied black candlestick the fact that its appearing at the bottom of an extended downtrend, makes every session having the 'characteristics' of a bottom that never comes.

To: Jim Cash who wrote (5586)	3/1/2001 9:20:19 AM
From: Dave Gore	Respond to of 6445

Jim, an interesting observation. There is a lot of psychology in the Market isn't there and with the futures down this morning, the scanario becomes interesting. Will we fall further and then reverse and rally, even though there is not a catalyst in sight? Not many are expecting we could rally without a catalyst, but it's possible we are just so short term oversold that the Market might fool everyone and do just that. Or maybe we just keep going down until some form of capitulation occurs, but we've talked before on this thread (corrtesy of Lane) that maybe in this day and age we just a trickle out capitulation as Mutual Funds mgrs. try day after day to unload their massive positions. The little guy has so much tied up in funds, maybe we can't expect the type of single blowoff day that we got on Black Monday. I still think we can get more capitulation than we've gotten, but I also believe the above is partly true too. One thing is that there sure is a lot more shorting going on, so covering rallies are likely at some point. We'll all be watching...

To: Jim Cash who wrote (5586)	3/1/2001 11:02:18 AM
From: Lane Hall-Witt	Read Replies (1) \| Respond to of 6445

Jim-- Quick observations on both of your points. First, under almost any scenario, if Greenspan cuts before the March 20 meeting, I think that will absolutely shatter any remaining confidence in the Fed's ability to manage the economy. It will add much-needed liquidity into the system, of course, but it will also show everyone once and for all what many of us here already know: that Greenspan doesn't have a clue about what's going on right now. Unfortunately, about the only thing going for the economy right now is this blind faith that Greenspan will pull it out. In fact, I don't think he has any idea what he's looking at right now. If the broader business community and consumer public also figure this out, we'll be in real trouble. If Greenspan immediately goes out and changes his mind, I think that'll put his shaky grasp of the situation on display and could shatter confidence in his ability to save us. Second, I agree with your notion that we shouldn't fight the Fed, but the most important question for traders is: when is the market going to start pricing in the rate cuts? Recall that the market successfully "fought the Fed" for about a year in 1999-2000 by soaring higher in the face of a series of rate hikes. Since April 2000, it has been suicide to fight the unfriendly Fed. But it took a long, long time before the market figured out what rising interest rates would do to the economy. I expect the market to price in the friendly Fed at some point, but we could still have a long way to go on the downside before that occurs. We'll have to watch the charts to see when the money starts to come back in. An additional factor to consider -- and it's hard to extract exactly what influence this has -- is the market's reaction to the Bush Administration's approach to the economy. The Bush people are doing three things that I suspect may be causing some concern. (1) Muddling up sentiment about the dollar: the market has to be wondering if W actually meant to hire Paul O'Neill, the right fielder for the New York Yankees, instead of Paul O'Neill, former chairman of Alcoa. Secretary O'Neill has been absolutely disastrous so far. I expect him to be the first cabinet-level appointee in the Bush Administration to resign. (2) Tweaking its nose at the bond market: the debt folks really bought into the idea of paying down the debt, and I think they're nervous about the very blunt talk from Bush about the debt. Bush has said this is not a priority, and Paul O'Neill has been undermining the Treasury buyback plan. It's conceivable that the bond market will eventually buy into the Bush approach, but it's very different from the Clinton program and is creating uncertainties that'll take some time to clear up. (3) Returning to supply-side, trickle-down economics. We all know that the hero of the 1990s economy was the average American consumer. The economic miracle of the '90s was a demand-driven phenomenon. Bush is now explicitly taking us back to supply-side policies: the tax cut is focused like a laser beam on the rich, and a number of Bush's advisors are dependable supply-siders. I personally prefer demand-side to supply-side economics, but I'm open-minded on the issue of whether this approach will actually work or not. We'll see. The near-term problem is confidence: again, this is a very different approach from the Clinton Administration, and it'll simply take some time for the markets to adjust and, I hope, develop some confidence in the new direction the Bush Administration is taking us.