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

To: Chispas who wrote (79044)	6/20/2001 8:31:24 AM
From: t2	Respond to of 99985

Here is Tod Harrison's (realmoney.com) take on the market today. Probabilities & Emotion 6/20/01 7:51 AM ET Good morning, and welcome back to the stressful step. When we last left this minxy muse, she was struggling to digest the disappointment of another failed rally ... as well as a steady diet of sell orders! It was a valiant effort, to be sure, but when all was said and done, the bears were once again leading the waltz. As we struggle with a most difficult environment, we must continually adapt our methodology to the convoluted crosscurrents. Each trader has a unique brew that they mix when crafting a thesis, and different junctures beg different weightings from the various metrics. With the three prongs (fundamentals, technicals and psychology) continually shifting, our job description becomes one of identifying a continually moving target, and adapting our posture accordingly. The fundamentals are problematic. They have been bad, they are bad and, as far as visibility is concerned, they will continue to be bad. Having said that, the stock market is a leading indicator, and as such, will turn higher before the economy shows signs of life. That, in a nutshell, is what makes the current malaise so difficult to game. Everybody knows business is abysmal; it's just a question of whether it will continue to get worse. During periods this year, players have chosen to peer through the fog as they attempted to look across the valley. That psychology is what has driven the (thus far) false rallies ... and spurred the intense emotion of performance anxiety. It's the age-old issue of fear vs. greed, and it's been a costly lesson for investors to learn. Continued below. Probabilities & Emotion, 2 6/20/01 7:51 AM ET On the technical front, we've spoken at length about the recent breaches of our support zones, but other indicators are beginning to flash encouraging signs. The stochastics, ARMS index and short-term oversold condition (as well as pervasive glumness) are all potential positives, and these signals are a large reason why I've become incrementally bullish into this latest decline. As I write, I'm listening to downgrade after downgrade as the analyst community is seemingly throwing in the towel. The futures are reacting accordingly, but this type of capitulation is bullish, in my opinion, despite the fact that they're likely warranted. I've been saying for three months that we were heading back to the lows, but I don't see it occurring on this leg of the move. That thought isn't about emotion, it's about digesting the probabilities of my trading mix and juxtaposing it against the current landscape. Hey, I may be a bear in bulls clothing, but I'll always be an honest one. Good luck today. R.P.

To: Chispas who wrote (79044)	6/20/2001 9:58:06 AM
From: t2	Read Replies (2) \| Respond to of 99985

I noticed that CSFB had some report on MSFT...it was noted on CNBC. MSFT is pushing for a PC upgrade cycle. This the big one after Windows 95. That was what I had been discussing for about a month or so. Unlike "Windows 98" or "Windows ME", XP will result in hardware requirement changes. The older versions only meant software upgrades. That is a big deal for the hardware stocks like Intel, HWP, Dell. It is a just a matter of timing before they start moving up. The old PCs will have to be replaced and everyone knows it; demand will be there. Also noted that PC vendors will now offer consumers coupons for the Windows XP upgrade that happens late this year. That could mean that the back to school season may be better for that sector if people realize they don't have to wait for the next operating system out of Microsoft...coupon for the upgrade should do it. I guess that also explains why MSFT is issuing a hardware requirements release to let the PC makers know the minimums. To me it is just a matter of timing the buys of these stocks. The analysts like Dan Niles, Ashok Kumar, Joe Osha also know this. They want to be in a position to call the bottom. They are well aware of what Windows XP means to the hardware stocks. Time is probably running out to call the bottom on the group. I am more bullish on Intel and the PC makers today -- my guess is that some analysts are about to change their views on the sector. Just watch these analysts in the next 2 months; you will see the "penguin" action as CNBC puts it.