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

To: t2 who wrote (76906)	5/12/2001 2:58:28 PM
From: bobby beara	Read Replies (1) \| Respond to of 99985

nv, the fear that was in the market that created the buying opportunity in early april has now been replaced with greed. this is an excerpt from larry mcmillan's weekly update from may 4th (available free by email at optionstrategist.com), his main put/call ratios and breadth oscillators remain on buy signals this week, but he waits for cross-overs to go to sell signals, the dow has gone up 1800 points in a short time, it's time for a rest, i suspect the dow will could give back 40-50% of that move in a correction. >>>>>>>There is one final "indicator" that I want to point out. It is a subjective one: on Wednesday, after a brokerage firm upgraded Cisco (CSCO), there was massive call buying in the old tech names that I thought had mostly been relegated to the "garbage heap." Names such as Akamai (AKAM), Excite@Home (ATHM), CMGI (CMGI), Cisco (CSCO), Earthlink (ELNK), Extreme Networks (EXTR), Corning (GLW), Inktomi (INKT), Infospace.com (INSP), Metromeida Fibre-Network (MFNX), Novell (NOVL), Palm Computing (PALM), Sprint PCS (PCS), Portal Software (PRSF), Sycamore (SCMR), Safeguard Scientific (SFE), Storage Networks (STOR), and Verisign(VRSN) all had option volume more than double their usual levels! Thus, speculation was rampant in a huge way. In my opinion, it is not a healthy sign to see that kind of excessive speculation in these broken-down names. So, overall, we're still bullish but tentatively so. Some of the chinks in the armor are beginning to look worrisome. So be sure you've taken partial profits on a good chunk of your long positions and tighten your stops.

To: t2 who wrote (76906)	5/12/2001 3:10:57 PM
From: American Spirit	Respond to of 99985

Can look at market two ways now - both valid. One thing I have noticed, that the market is seeming to do the opposite of what is expected. "For weeks now, the market has been taking for granted another half-point interest rate cut Tuesday afternoon. Then came Friday's solid sales figures and sunny consumer-sentiment projections, suggesting that the nation as a whole is far less perturbed than Fed Chairman Alan Greenspan. Investors responded with a mild sell-off as they priced in the possibility of a smaller rate cut, and now look likely to sit on their hands until the Fed's announcement. But most Fed watchers still think the central bank will cut aggressively. Of the 25 primary bond dealers surveyed by Reuters, 24 are sticking to expectations of a half-point cut, to 4%, in the benchmark federal-funds rate. ``I think the Fed is interested in making sure that the problems of the New Economy don't spill over to the Old Economy,'' says Peter Canelo, U.S. investment strategist at Morgan Stanley. ``So they'll overdo the easing just to make certain.'' Whatever gift Greenspan brings on Tuesday, it will have come too late for the likes of Applied Materials (NASDAQ:AMAT - news), which is expected to report a drop of about 50% in sequential earnings that evening. Neither is it likely to save Hewlett-Packard (NYSE:HWP - news) from posting a year-on-year decline of 60% or more on Wednesday, or forestall job cuts at Dell Computer (NASDAQ:DELL - news), which on Thursday is expected to report that earnings are stagnating after a steep decline in the previous quarter. In fact, no matter what the Fed does, it will be hard pressed to brighten the mood in the Austin bunker where plans for the PC industry's current price war were hatched, and where Dell executives aspire to be ``ruthless.'' Retailers, on the other hand, should cheer the runaway buildup of the money supply that has accompanied monetary easing. If the champion cost-cutters at Wal-Mart (NYSE:WMT - news) sound positively happy-go-lucky next to their Dell colleagues, well they should: ``Investors Must Own WMT,'' is how Salomon Smith Barney's retail analyst Richard L. Church puts it, and no one is likely to think differently after this bellwether for the entire U.S. economy reports another year-on-year earnings gain Tuesday. If anything, economic worries have boosted Wal-Mart and other discounters at the expense of department-store chains, many of which are expected to report middling results next week. And while optimists like Morgan Stanley's Canelo figure this is as dire as things will get, they must still contend with a stubborn band of pessimists who argue that it's sometimes brightest before sunset. Michael Niemira, a senior economist at Bank of Tokyo-Mitsubishi in New York, is among the skeptics, predicting an outright recession in the second half of the year triggered by rising energy costs, slowing consumer spending and capital-investment plans paralyzed by slumping profits. He likens the current surge of optimism to the one that prevailed in May of 1990 after another series of rate cuts — and right before the last recession hit in earnest. ``We're still teetering at this point,'' Niemira says. ``What will push us over is higher energy prices.'' But that's a prediction for late summer. Next week, investors are still likely to take their cues from the Fed, techs like Applied Materials (which may be tempted to call its own bottom based on the recent Morgan Stanley upgrade), and stores bustling with shoppers. Also factor in the coming two weeks of demand-stimulating headlines as lawmakers haggle over specific tax cuts in the wake of Thursday's U.S. Senate approval (in outline) of the Bush tax plan. Why worry about affording that new car or wonder whether the Dow has peaked when $100 billion in small bills is about to hit the fan? By the time that air stops blowing, money will indeed grow on trees.