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

To: gc who wrote (82651)	2/22/2002 7:44:06 AM
From: Tom Pulley	Respond to of 99985

gc, re <Are we heading to Naz 1400?> Since I am going long this morning, I hope not! It would really surprise me if the Nazdaq continued down to 1400 (but I've been surprised by the market many times in the past). The September low coupled with what happened and is happening in the economy looks like the cycle low to me. So, my model views this drop as a correction in a new bull market off the September lows. The wildcard could be Enronitis. Enronitis could be having three effects on the market from my view. First is the general psychological effect which is surely built into the market averages by now. Second is the effect on earnings of companies that have off balance sheet financing. Since the credit rating agencies are going to be tougher on off balance sheet financing, companies using it will have to lower debt and this will slow their growth due to less capital available for investment than planned. By now, most of those companies have probably been identified and that effect should also be built into the market averages. Third and perhaps more problematic, companies will likely become more conservative in their accounting (who wants to testify to Congress). Who knows how many accounting games have been going on and how conservative companies will become in their accounting? If a lot of CEO's and CFO's decide to be more conservative in their accounting, perhaps the market will have to adjust to lower future earnings. But, it is still hard to see 1400 without another recession. Bottom line answer to your question after all that is...... I don't know, but my money is on a move back up long before 1400. Tom