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

To: gc who wrote (72579)	3/18/2001 12:31:43 PM
From: Casaubon	Read Replies (1) \| Respond to of 99985

I understand your thinking here but, there are a number of flaws with your conclusion. You have not compared the relative returns of those reporting these numbers vs. historical benchmarks, in particular, recent results. Also, you do not recognize that this is money which can and will be deployed fairly rapidly. You also fail to recognize the potential contrarian result that no one is net short. I myself am uncomfortable leaving shorts open, so tend to close them rather quickly. Though, that has been the majority of my profits for the year.

To: gc who wrote (72579)	3/18/2001 1:10:33 PM
From: Square_Dealings	Read Replies (1) \| Respond to of 99985

I would not use these results as a contrary indicator. These are traders that are able to move ahead of the market, or move with it more quickly than the average investor. And many are probably in a high percentage of cash except in very strong market conditions. The "money on the sidelines" has to be viewed relative to the "debt on the sidelines" and at this juncture the money isnt coming back until some more of the debt gets cleared out. Unless of course you want to take positions here to help out those that have tax problems. The market can definitely bounce but until tax season is over there is still high risk of redemptions. M.

To: gc who wrote (72579)	3/18/2001 3:18:55 PM
From: Jacob Snyder	Read Replies (3) \| Respond to of 99985

Signs of a bottom: 1. The Fed is going to lower a third time next week. Stocks are higher a year after the Fed has done this. That pattern is extremely robust, a very longterm pattern. You have to go back to 1929 to find an exception. 2. Net redemptions from stock mutual funds, especially Growth or Tech funds. Again, this is an extremely robust longterm pattern: the crowd times it exactly wrong every time. Net redemptions in stock mutual funds correspond to market troughs; peaks in fund inflows correspond to market peaks. Every time. 3. valuations are now reasonable. The forward PE of the S&P 500 has now come down to about 20, which is (roughly the same as) the inverse of the yield on 10Y treasuries. A 4.5-5.0% yield on LT Treasuries justifies PEs higher than at any time since the 1960s. This is a rough yardstick which has stood the test of time. Yes, there are lots of individual exceptions. However, there even some techs where I can calculate a PEG of 1 now. I was 70% cash from January to June 2000, but I am currently at 0% cash, 80% long stocks, 20% shorts and puts. I'm even using margin, but I guess it doesn't count, because it's just for short-term range-trading.