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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Shealtiel who wrote (45053)	3/29/2002 10:28:47 AM
From: TREND1	Respond to of 99280

I hope you stay around this thread. Very good posting.IMHO. Larry Dudash

To: Shealtiel who wrote (45053)	3/29/2002 12:35:15 PM
From: Justa Werkenstiff	Read Replies (1) \| Respond to of 99280

Shealtiel: Re: "Justa, you queried (reply #45005): '... why hasn't the Comp. made new highs in price up to this point to correspond with previous market tops as marked by this measure?' ($NAHL)" "At the risk of stating the obvious, the NASDAQ small caps are being bought up, but buying has dried up in the NASDAQ large caps. In the current valuation-conscious mentality, fund managers are passing by stocks that were considered "fully valued" at the December/January top (especially those whose CEO's don't see much growth through the end of the year--read MSFT) and snapping up small caps where the leverage from the recovery is anticipated to be higher. Thus, expansion of new highs. Since the $COMP and $NDX are capitalization-weighted, the indices don't reflect this under-the-radar buying. John R.Haley cogently observed (reply #45027): "I might add that the Russell 2000 has exceeded its Jan high and is nearly up to its 52-week high." Thank you for taking the time to answer my rhetorical question. You are, of course, correct IMO. But in being correct the issue then becomes: can indexes like the RUT and Midcaps lead the broader market higher here? Unfortunately, in the case of the Russell and Midcaps, they have peaked in their current area a number of times which represented peaks in the market. The fact that the COMPQ and NDX have not joined them here at historically high readings for NAHL is a sign to me, anyway, of an unhealthy market. Re: "Implicit in Zeev's projection that the $COMP will hit 1930 and possibly approach 2100 is the thesis that the price of the many smaller cap stocks will lead ("stealth rally") the price of the fewer large cap techs, and that the large caps will follow them upward. Whether or not the thesis is sound, I do not know. (As you point out, the tape will tell.) But it is clear that the large caps must get in sync if the projection is to be met. Because if MSFT, INTC, CSCO, ORCL, and DELL don't move up, the $COMP isn't going there. Those five stocks comprise 24.5% of the total $COMP capitalization; and the 50 highest capitalized stocks constitute 50.5% of the 3850-stock composite index." Agreed, and the tape has answered in the negative thus far with the background of high bullish complacency. But the issue can be framed more narrowly: can the large caps go up and, if so, can they go up without a rotation out of the small caps? I don't know how it plays out exactly. I don't have to know. All I know is that the NAHL is ABOVE the area of recent historical market tops and that there is nothing bullish about the tape here as far as the COMPQ and NDX is concerned when compared against their respective recent tops.