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

To: eichler who wrote (76464)	5/3/2001 3:59:09 PM
From: High-Tech East	Respond to of 99985

The American Economy The dawn? May 3rd 2001 from "The Economist" AMERICA’S GDP expanded at an annual rate of 2% in the first quarter of this year, twice as fast as had been expected. Does this mean that economic commentators (including ourselves) have been wrong to fret about the risk of a recession, and that the Federal Reserve does not need to cut interest rates again? Unfortunately, the risks remain. On the face of it, the GDP figures were surprisingly strong. Consumer spending grew at an annual rate of 3.1%, a bit stronger than in the previous quarter. Total real business investment rose by 1.1%, much better than might have been expected from the dispiriting profit figures that American companies have been reporting. Look behind the aggregate numbers, however, and investment is less robust. Excluding buildings, business investment fell by 2% in the first quarter. Investment in information-technology equipment and software fell at an annual rate of 6.5% in real terms. In nominal terms, IT spending plunged by 13%, because prices of computers and the like fell sharply. That was the first decline in high-tech spending for a decade. A sharp slump in new orders for electronic goods suggests that bigger cuts in IT spending are in the pipeline. The boom in high-tech shares in recent years pushed capital costs down to virtually zero, which has caused firms to overinvest in IT equipment. A new study by Credit Suisse First Boston says that American firms overspent by $190 billion over the past two years. The bank reckons that IT investment needs to fall by an average of 16% in volume terms this year and next to eliminate that overhang. That, in turn, would imply an annual fall of 8% in total business investment. On the other hand, one bit of good news is that firms have reduced their inventories by more than expected. This reduces the risk of a big drop in inventories—and hence output—during the second quarter. Manufacturing remains in recession. The National Association of Purchasing Managers’ index was virtually unchanged, at 43.2 in April; so long as it remains below 50, manufacturing activity will continue to shrink. Also in April, vehicle sales fell sharply for the second month running. For the economy as a whole, The Economist’s latest poll of forecasters has an average prediction for GDP growth this year of 1.5%, up from 1.4% last month (see article). If that proves right, recession will be avoided, but the drop from 5% growth in 2000 would still be one of the biggest between any two years in the past quarter-century. Despite the biggest 12-month fall in share prices since 1973-74, and corporate announcements of increasing lay-offs, American consumers continue to spend. One symptom is that the housing market remains strong, and households have taken advantage of lower interest rates to refinance their mortgages on more favourable terms. The risk to consumer spending is jobs. New unemployment claims have risen to a weekly average of around 400,000 over the past month, up from 270,000 a year ago, and the highest for more than eight years. Full unemployment figures for April, due to be released on May 4th, were expected to show another rise in the official unemployment rate. If this continues, consumer spending will probably weaken in the current quarter. The sharper the increase in the jobless rate, the greater the likelihood that the Federal Reserve will cut interest rates again at its next policy meeting on May 15th. The first-quarter GDP figures were good news, but one should remember that they are not set in stone. When an economy slows sharply, growth is often overstated at first, and later revised down. This is because initial GDP numbers include estimates for some components of GDP that are derived by extrapolating recent trends (ie, from a period when the economy was growing faster). In the third quarter of 1990 initial estimates showed that GDP had risen by an annualised 1.8%. Revised figures later showed that the economy had actually slipped into its first quarter of recession. Copyright © 1995-2001 The Economist Newspaper Group Ltd. All rights reserved.

To: eichler who wrote (76464)	5/3/2001 4:56:04 PM
From: JRI	Read Replies (1) \| Respond to of 99985

What's your take on today? More down in store tomorrow? (COMPX) or do we retrace today's losses, and bob around...

To: eichler who wrote (76464)	5/3/2001 4:58:37 PM
From: eichler	Read Replies (1) \| Respond to of 99985

I had referenced the following link twice before, forgive me if it appears I am beating a dead horse with a stick, but I thought it was worthy of posting the link so anyone interested could check it out. I'll mention it no more, but anyone having their own opinions are encouraged to speak out... Message 15730873 It is mainly the second link on the referenced post which attracted my attention; the table showing the largest % gains for the Dow and Nasty. ***************************************************** Today's black daily candle on the Naz could have been worse in that it could have closed right on the low. Even so, a lower high and a lower low begs for follow through to the downside tomorrow. Stochastics and adx support weakness. On the shorter time frames (15 min and under), there is a glimmer of hope that a feeble 11th hour rally could continue. I wouldn't bank on it however. Any rotten news after hours today could hurl the index over the edge, IMO. Hope everyone took evasive action today and didn't get burned, protecting profits and preventing loss with stops at least. As an aside, KRY closed on it's HOD on slightly below average daily volume. I checked gold futures charts: 60 min, daily, weekly. 60 min broke through and closed above overhead resistance. Daily and Weekly charts appear on the verge of breaking the downtrend to the upside. I'm not at all what I would consider a gold-bug, it's clearly been one of the poorest investments of this last decade, if not longer. But, I smell an opportunity...if the indexes tank, I believe there is money to be made for at least short term safe-haven type of money movement. If a breakout actually comes to fruition, I would say serious money to be made. The mention of the dirty word GOLD is made on MDD as it pertains to a more-or-less inverse relationship between equities and the yellow stuff. Just an idea, not a recommendation. Best of Luck to all, We shall see what tomorrow brings, Regards, Eichler P.S. Sincere thanks to so many who have posted (and pm'd) to me well wishes for my continued recovery and words of encouragement to continue posting my "observations". I shall continue for as long as "you" agree it is beneficial.

To: eichler who wrote (76464)	5/3/2001 5:24:53 PM
From: Ron	Read Replies (1) \| Respond to of 99985

On the COMPX daily chart the 20 day is moving up to meet the 50 day MA. Good enough for me. Watching primarily for short plays the next few days at least...

To: eichler who wrote (76464)	5/4/2001 10:53:45 AM
From: eichler	Read Replies (3) \| Respond to of 99985

Been missing all the fun today. Computer has been tormenting me this morning. Haven't been able to get more than 5 minutes of continuous use of the computer before everything freezes up and I get network socket connection errors. Then have to force quit, restart, try again. Tried software restore disc and tried browser configuration. Think the server is having problems. GRRRRRRRRRRR Worst thing about technology is when you come to rely on it and then it doesn't work. 3 hours of messing around so far, should have stayed in bed today. Could do without the aggravation..... Maybe this time I'll get lucky and it'll stay working...... Eichler