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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: GREENLAW4-7 who wrote (23892)	5/19/2001 10:00:05 AM
From: besttrader	Respond to of 37746

Thanks Greenlaw. AWESOME post from you! Great stuff!!!

To: GREENLAW4-7 who wrote (23892)	5/19/2001 1:02:57 PM
From: DebtBomb	Respond to of 37746

greenlaw good post. We might be near the top. Have all of the sectors ran like in Jan.?? Semi's, bio's, storage, fuel cells, dot.coms, software, hardware, telecoms, even crap stocks?? I agree with you about CNBC and the media, and perceived good news being good for their bottom lines. According to the media right now, all news is good news, LOL. Some think MM's will continue to squeeze to 2500, 2800, 3000, nahhh. Those funds better keep on buying those semi's up, or we'll have another sucker's rally like in Jan.. The media is starting to mention the risk of running up, then not having a year end rebound pan out, but they're kind of hush-hush about it. Oil is rocking, gas prices popping, this will cause some inflation. As people have to drop big bucks in their gas tanks, and pay for high electricity bills from air conditioning use, and possibly have black-outs, I doubt that they will be buying overvalued stocks with all of that extra cash they don't have. I saw some samples of 12 month stock funds performance, they are hurting, their money is disappearing. Right now, the media is yelling that with all of the liquidity Greenie is pumping into the system, stocks have to go up. Not! There's lot's of places for that extra money to go, IMO. Sure, Greenie is going to give us a bounce, but how much?? The Nasdaq is having a hell of a time with 2200 right now.

To: GREENLAW4-7 who wrote (23892)	5/19/2001 1:06:56 PM
From: DlphcOracl	Read Replies (4) \| Respond to of 37746

greenlaw4-7: Correct analysis (regarding valuation, anyway) but wrong conclusion. Don Hays, one of the most astute of the old-timers, particularly with regard to market timing and direction, both ST and LT, always like to make the point that the ST and intermediate-term market direction is determined by a combination of three factors: Valuation, market psychology, and Fed money policy. At present, two of the three are working against you and the short-side. Investor psychology, both individual and institutional, is clearly different than they were from January through March. Investors are consistently shrugging off negative news and believe that we have hit the bottom (or are near it) and will slowly recover later in the year. Many tech companies are reporting that things have stabilized and have given cautiously optimistic guidance. I am not saying they are right or wrong -- only that this is what the market is hearing and believing. Although valuation will win out eventually, this is in the LT and will not influence what happens over the next few weeks or months. Your comment regarding the recent spike in gold as an indication of inflation is (IMO) incorrect. The price action in gold, lumber, oil and the action in bond-yield are ST forces which have more to do with technicals and traders; this is background noise. The LT forces are clearly deflationary, especially if judged by historic standards over the past 20 years. The .1% increase(s) in inflation reports are not significant and the vast bulk of the data regarding inflation YTD has clearly shown that inflation is NOT a factor or risk. Playing the short side of the market is quite tricky, much more difficult than most of the followers on this thread realize, because you have to be correct TWICE: you have to select the correct stock and your timing has to be correct. NVDA and KREM are great cases in point. How many players have tried to short these stocks this year and have lost money? You know who you are!!! Because two of Don Hay's market indicators are clearly positive, the trend is for the bull market action to continue. You are shorting into a bull-market, a difficult proposition. I'm not saying that you can't make money at it, only that you are swimming upstream. Additionally, unless there is a clear-cut change in investor sentiment, that is the way I'm playing it. Finally, I think most observers agree that we are not in a depression, nor are we entering one. Consumer spending remains intact and I doubt if energy prices will significantly affect it. The continued strength of the housing market also argues against recession. One final point: it is important to separate the NASDAQ from the non-tech stocks regarding valuation. While many of the tech stocks are clearly overvalued, especially with unclear earnings picture in Q3 and Q4, many of the non-tech stocks have been in a bear market for several years and are fairly valued. Although the Dow is now near historic high, many of these stocks still have upside. My point: the market is (IMO) not peaking; rather, it is more likely to go higher through May. The tale of the tape will be told in June when investors and the market react to earnings warnings. If we are to retest the March and April lows, it should be here. My guess is that there will be a 5-10% correction which will be treated and a buying opportunity by investors who are afraid of missing the boat. P.S. I agree with all of your comments regarding tech stock valuations and the piper will be paid, but not here and now. After the Fed-induced bull market rally has run its course, there will be a significant correction in the NASDAQ, perhaps toward the end of the year or in 2002. Valuation, as always, eventually wins out. DlphcOracl