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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (10077)	2/3/2002 4:21:41 PM
From: sandiegobear	Read Replies (1) \| Respond to of 19219

Hi J.T. Good points, except maybe no. 1 Message 17003020 It looks like the ratio has been recalculated using operating earnings; kind of a pro forma PE.

To: J.T. who wrote (10077)	2/3/2002 10:15:04 PM
From: nsumir81	Read Replies (1) \| Respond to of 19219

Re: Rydex Total Assets Update: Comments.. Tagging on to my message 10058... Do not underestimate Enronitis. In Barrons's The Trader section I think, it was written up on how AOL is now getting dissected and punished at least in part to interdivisional ad revenue recognition. S&P earnings have also been revised downward by other sources, and I do not personally put much faith in such estimates anyway. Never before, historically have there been such VARIABILITY on earnings estimates for a variety of companies and given that relative to the market run up, the PEs, the P/Ss etc etc and the VIX, the market is looking toppy. Liquidity measures have been declining per my untrained eyes and weekly read of numbers, for some few weeks now and the market has been falling (Surprise, surprise!) The A/D line has been masked and aided by many closed-end funds and other instruments to a major extent so much so it is suspect to many. See what cautious Tom McManus of Bank Of America has said this of this in the past. Excluding such instruments it has been actually showing a bearish divergence. The major indices are all below their 50 and 200 day MAs. The SOX at 552.87 is just marginally below its 200 day MA 554.86 and somewhat below its 200 day EMA 561.35 per my sources. VIX is low per the trend of last few years since 1998. It is useless comparing it with early to mid-90s since the VIX has risen and given that it is low relative to the 3-4 year trading range it has been in, it is indeed low. Commodity prices have been moving up for two factors. One is stockpiling by some for fear of missing out on demand if it does come back. The second that is even more significant and actually led the price increases in the beginning was voluntary cuts and price increases by the commodity producers. They had been taking a lot of punishment with declining demand for so long that back in late October/early November, in Barrons, industry sources were anticipating these cuts would take place, and that would boost prices in the short run (but not because of returning demand which is the biggest problem). Add to that automakers (for e.g.) inability to increase prices, is leading to further capex cuts by automakers and other pushbacks. Coming from Detroit, I can tell you that much. Deflation is NOT a good thing. Go into any store and you can get stuff for fire sale prices and sometimes free, if you are good at catching rebates. Sure inventory liquidation one may call it, but that is only paving the way for REDUCED output levels (i.e borrowing from the future). HENCE the capex cuts. If the prospects were indeed so good why are folks still not getting hired back? In fact, they are being cut as we speak (again I can tell you this from where I live). Median Inflation if one sees it has come about through 3 components: Rents, medical costs and education all of which posted the biggest increases not seen for some years recently. So what does that leave us with? I do not see a need to elaborate any further. Insider Selling..forget the headlines of the TYCO heads buying up stock. More has been and is being released in EACH AND EVERY bear market rally (going back to January 2001), that we have had. That to me, given the MAGNITUDE of it, especially advised AND EXECUTED by the major brokerage firms who go out and put buy recos on these stocks and equity allocations is one of the factors I tracked most closely to predict a prolonged downturn back in July/Aug 2000 ..for myself and a few close ones. Cash on the sidelines ...nice media headline by major talking heads but in reality is not much higher relative to stock market capitalization than it was a few years back. Besides, most of the cash needs to REMAIN as cash since it is used for day to day operations by the institutions and companies, which make up the bulk of the cash on the sidelines anyway. The cash went out for good reason. And will not return unless it sees good reason. Now all companies are cutting back and are hoarding up on cash. Much cash has been raised by companies selling cross-holdings in various other companies. For e.g. INTC sold a good-sized stake in a relatively obscure company (high-flyer IPO in 2000..NUAN). That is cash on the sidelines and it does not return especially given the fact that INTEL to give an example, itself cut back on Capex 25 %. To go further back to earnings, IBM has been consistently 'earning' more per share due to stock buybacks, tax revisions, etc. in the face of continuously missing revenue numbers. There is suspicion being raised on how that can go on. 1-2 quarters maybe. But not several in a row. And for stagnating revenues, IBM is priced twice what it was in early 1997 when business was actually hot and so was the tech cycle. Intel is earning less than early 1997 and is priced twice as much as early 1997. Same argument there. Intel's capex cutbacks followed all those by Qwest (nevermind other problems at that outfit), Verizon, ATT, etc. Even TSM cut back after having said earlier that it was seeing a 'pickup' in orders. We are talking drastic capex cuts. As for DRAM prices and the tech bottoming. A move from -44 % to -42 % in November was seen briefly as a turning back of the cycle in some major number that the SIA or some outfit tracks. It was all good for a trade. Layoffs continue in secrecy. I know of folks at CISCO and other outfits who were laid off quietly. The headlines do not say it all. Like the Durable goods orders for December showing a better than expected jump vs November, only to find that November ws revised down more than earlier reported. The same with GDP. The revisions will show it. Or the recent 'decrease' in unemployment rate. Look closer and we will see what it really meant. The market is supposed to be a predictor/discounter. If all this good news is ahead of us or the good news keeps hitting the headlines as we think it is now, why has it been going sideways for 3 months now? (for e.g. the S&P). Why does it seem to be weakening, if good things indeed lie ahead? It is all RELATIVE. Good news may be ahead or shall we say, less bad news. But there comes a time when after a major rally, just less bad news is not enough for a spirited rally. Call it dashed expectations. Oh well, more folks have got trapped in the overhead unloading zone for the past 3 months. Time will tell. Volume has been declining on a weekly basis and is not as high as one would think it to be versus say Nov 2000-Feb 2001. When I last calculated the first 12 weeks of the rally weekly volume I found it to be much weaker than the period I mentioned above. Some volumes have been amplified by many stocks trading under $ 10 (need more shares for a fixed dollar number) and that is masking the decline in volume. We look for data that confirm our theories that was based initially on some OTHER data. Sometimes we get it right. Sometimes we are lucky. Happy Trading all. The Patriots just won. GREAT GAME ! Hmm...that is one indicator for an up market. But then the Dow took out the December low in Jan, Jan was a negative month, etc etc. Like we believe, do we in these 'causal' relationships?

To: J.T. who wrote (10077)	2/5/2002 12:01:48 AM
From: J.T.	Read Replies (3) \| Respond to of 19219

Rydex Total Assets Update for Monday, February 4th, 2002: Regular Series: SPX Long - NOVA 227.3 MillionBULLISH Inversion SPX Short- URSA 280.4 MillionBULLISH Highest Close Since 10/18/01 NDX Long - OTC 861.3 MillionBULLISH Lowest Close Since 10/31/01 NDX Short- ARKTOS 156.1 MillionBULLISH Highest close since 09/18/2000 RUT 2000 - MIKROS 44.3 MillionBULLISH XAU Precious Metals 82.4 MillionBEARISH Highest Close Since 10/08/01 XOI Energy 15.4 MillionBULLISH OSX Energy Services 23.4 MillionBULLISH BKX Banking 18.6 MillionBULLISH BTK Biotech 238.4 MillionBULLISH Lowest Close Since 09/26/01 Money Market 1.607 BILLIONBULLISH Double Overbought Highest Close Since 09/21/01 *************************************** Dynamic Series (200% correlation to Index) SPX Long - TITAN 89.3 Million Inversion SPX Short- TEMPEST 165.9 MillionBULLISH All Time Highs NDX Long - VELOCITY 169.7 MillionBULLISH Lowest Close since 10/31/01 NDX Short- VENTURE 230.6 MillionBULLISH All Time Highs ********************************************* Money Market TA hits 9/21/01 market low cash levels. XAU goes parobolic as it has books its highest close XAU 65.25 since May 21st, 2001 (XAU 65.79). The five day RSI closed above triple overbought (90.31) while the more stringent test the 21 day RSI closed above the overbought (70.87) which is a rare feat for any index to overcome. If it takes out XAU 66.55 tomorrow, XAU 68.10 area is within reach and will take XAU above quadruple overbought levels before profit taking will come in. After successfully scalping gold stocks and Rydex XAU index for well over a year, I took my eye off the ball and missed a monster rally. But I am confident XAU and gold stocks will pull back at least to neutral on the 5 day RSI which is in the XAU 57.50 - 60 range. Rydex Sentiment numbers above speak for themselves and if tomorrow is down I am confident AAII polls will show Bulls back below 48 and Bears back at 30 level on Wednesday when the report is released. SPX has a 50 - 50 shot of closing in on SPX 1,060 intraday area like a homing pigeon in the next two trading days. I will like to take a look at the market technicals and sentiment read if this materializes. If by chance we close below SPX 1,050(at this or some later 2002 date), capitulation will clearly unwind positions and we will head down to dead man zone SPX 1,016 - 1,018 before reversing hard back up. And it is quite conceivable we may need this kind of whiplashing to create the level of panic similar to 9/21 lows. For the broad market, I see good elastic support at DOW 9,460 area and COMP 1,770 for intraday lows over the next two trading days before we reverse back up. If we are in and A-B-C type rally, wave C should shoot UP right out of the blocks tomorrow within the first 90 minutes of trading as we are severely oversold on an hourly basis. Regular Series: 100% Long NDX OTC Dynamic Series: 100% Long SPX TITAN Best Regards, J.T.

To: J.T. who wrote (10077)	2/5/2002 2:34:47 PM
From: High-Tech East	Read Replies (1) \| Respond to of 19219

<<Little press will be given that S&P Earnings were revised UP in Barrons this past week and all of a sudden the P/E ratio is down to 28.57 from 40.03 last week (as reported in Barrons). We all know from a historical level this P/E ratio is high but I note one that earnings will be revised once the rest of excess inventory is liquidated in the next two quarters and two dividends relative to T-Bill yields are in line with past Bear market bottoms '90, '87, '82 etc. courtesy of Gerald Appel.>> ... from Dow Theory Letters by Richard Russell, February 4, 2002 ... I've received many e-mails from subscribers asking about the sudden, shocking drop in Barron's P/E for the S&P. The previous week Barron's showed the P/E for the S&P at 40.03. This week Barron's shows the P/E for the S&P at 28.5. What in hell is Barron's doing? This is a deliberate departure from accounting standards. What's happened is that Standard & Poor's has modified its reporting and is now using Operating Earnings to calculate the S&P P/E. A subscriber writes, The change is noted "in an obscure notation in the print version of Barron's." This same subscribers states, "For the record we calculate P/E by dividing the total per share dollar value of the S&P by their total EPS. As of Friday's close, the real P/E was 42.40." ... totally amazing ... and the beat goes on ... Ken Wilson