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

To: Zeev Hed who wrote (77764)	6/3/2001 10:50:11 AM
From: Davy Crockett	Respond to of 99985

Hi Zeev, It appears that the deflationary environment that the collapse of the equity markets have spawned is spreading. Right now I'm am toying with the idea of purchasing some more electronic gadgets, but I am waiting for further price drops, (nothing new, I know), but I have the same mindset when I purchase clothing, equities, autos. However energy costs, basic food stuff costs are increasing. Which is forcing me to wait even longer before I purchase electronic gadgets, clothing, equities, etc. (I keep waiting for those prices to drop)... so a vicious circle has been born... FWIW Regards, Peter

To: Zeev Hed who wrote (77764)	6/3/2001 2:59:03 PM
From: t2	Read Replies (1) \| Respond to of 99985

Zeev, I read your response to me. Believe it or not, I agree with a lot of what you stated. Don't agree that yields on US bonds will stay this high. Assuming the scenario you laid out of global slow down Europe/Asiain in your scenario of global slowdown: What happens to the US dollar in that case? It will go up, simple as that. What happens to bond yields? They will drop dramatically as demand for US bonds will be very high. What happens to import prices given such slowdowns in Europe and Asia? Inflation will not materialize. What happens to bond yields? They will drop dramatically as demand for the bonds will be very high. What happens to oil? It tanks thanks to the global slowdown. Buying power of US consumers will increase significantly due to cheap imports. The US not much of an exporter except for technology. Demand for US technology may actually increase as countries try to get more efficient..ie. more competitive. I realize that this theory has many flaws but I would point out that predicting appears to be more of an art than science if we learn some lessons from this recent slowdown; The FED and the majority of economists got it so wrong. What suprised me about economists was how wrong they were recently in predicting FED actions. Some of the FED surprise moves seemed like no-brainers to me----could have just been some lucky guesses on my part of course. At the present time, I have faith in Alan Greenspan to do whatever it takes to turn around the economy. One thing I have noticed is that he no longer seems stuck in his ways and will look at economy through a very broad lens. I believe this is something he picked up from this recent market collapse. You noted the historic norms for PEs etc.. There seems to nothing that happened in the last 2 years that seemed normal. I don't believe this type of market can easily return to some normal patterns. We may just have experienced a sharp, temporary drop off in demand. I noticed the SUNW's McNeally interview in which he noted that there was a possibility that in current times, we could go from high growth to negative growth and return to high growth very quickly...ie. very fast cycles; thanks to technology. I am just saying that there is a chance he may be right, more or less. We won't know for a while longer. None of these are technical indicators, and frankly, when we bottom (IMTO, sometime later this year, probably in August), most of these elements will still be in place, so what will be the difference? The fact that sellers will be exhausted and selling pressure subside. This will be reflected of course in lower prices for equities, bringing at least some of these parameters more in line (lower prices will mean better valuation measures). So How do we now when to jump in? I doubt anyone knows for sure, but technical indicators help in determining if seller exhaustion has occurred, if there is enough money on the sidelines to sustain a new Bull market, or if we are simply going to stay in a wide trading range for years to come. We already have two years under the belt in the Dow... I guess in your technical opinion, the selling was not exhausted by end of March. To me the selling has exhausted in technology stocks as the Nasdaq market bounced up significantly. I realize it looks like something like the spike we got from May to August last year to about 4200 on the Nasdaq. Don't believe it will follow the same pattern. Short interest is much higher, more cash in money market funds, and most importantly the mutual funds actions. Like I stated earlier (so many times), the big funds have gone underweighted technology. When the biggest funds are underweighted the sector, you are not going to see the selling like we have witnessed in the past. The turning point was what happened to the tech heavy Janus funds; they had huge cash positions earlier this year, just selling one tech name after another..basically fighting for their fund's survival. I also read that Stansky of Fidelity is buying technology names. One has to question, why is a technology bear buying now? IMHO, it is a mistake to hope for much lower prices later in the year, when you have the biggest funds waiting for buying opportunities--that will drive prices higher by then. Large funds like this are going to be buying a little at a time but do it for a long period of time. I am not bullish on energy and feel it is a bubble being formed. Most are predicting strong, stable prices for energy in the forseable future. Is that not how a bubble can form? I mean an energy price bubble; it will likely hurt the stocks as well but not as bad as what happened to techs. I remember someone posted the article on big money being spend to increase the nation's energy capacity. However, I am still long a bunch of energy stocks. The aftermath of that bubble bursting is going to stimulate the economy as well. Zeev, I realize you made more points. If the market behaves in a very rational way, your target for an August bottom in the markets have be correct; and you still be correct of course. All I look for is something that can indicate direction beyond charts or fundamentals. Fundamentals and technicals are very well known and there does not seem to be too much advantage in using them--there may be some if one can interpret the data correctly. IMHO, it was the mutual fund behavior, short interest, tax related redemptions earlier that caused the last big drop on the Nasdaq. That is my case for being bullish now and not later. I look for slight moves such as what happened with Oracle in the same way someone looks at a chart and notices a small upturn or downturn. Sorry, I don't understand what exactly a "wave" is..yet.<g> Whatever your methods, I hope you succeed with them. Good Luck. BTW--I was not trying to put down TA, it was a just a reaction to an event that was being dismissed as just insignificant...something that I thought was enough to move the market next week...because Oracle not issuing a profit warning was significant as analysts have also now stated that a warning now is unlikely. That also made Friday's gain ahead of the warning possibility also very significant, IMHO. Sorry if the post is disorganized--too hard to type long posts.