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

To: marginmike who wrote (11797)	4/26/2002 3:22:20 PM
From: J.T.	Read Replies (1) \| Respond to of 19219

Thanks for taking the time to develop the list. I will give it a critical look and post back this weekend. Best Regards, J.T.

To: marginmike who wrote (11797)	4/26/2002 5:32:27 PM
From: Gamma Positive	Respond to of 19219

Good point about liquidity. Typically during this seasonally bullish period, M2 (and MZM) has grown, but not during this year. I think it has a lot to do with tax receipts being down significantly (due to a number of reasons). And also that the Fed realizes that Q1 growth is merely a blip due to their corrective actions of 9/11. Another thing I've thought about with respect to your reference to FNM and FRE mortgage derivatives is this: What would happen to the mortgage market if FNM and FRE could not easily hedge their mortgages? They would likely not lend out as much. Which in turn would slow the consumer side of the economy. Which could lead to a double dip. As I said before, the use of derivatives is not inherently bad, and should not be over-regulated. Without derivatives, the market is actually less efficient and inherently more risky. Derivatives used properly (by FNM and FRE) help to reduce mortgage rates and therefore to spur the economy. The alternative is actually not that healthy.

To: marginmike who wrote (11797)	4/27/2002 2:15:45 AM
From: J.T.	Read Replies (1) \| Respond to of 19219

Cast your vote by Sunday evening 6 pm EST Deadline to count: MELT-UP or MELT-DOWN? Cast your vote here: Subject 52835 Is the broad Market, as measured by the DOW, SPX and COMP going Lower or Higher over the next 18 months between now and October 31, 2003. 4/26/2002 Close: DOW 9,910 SPX 1,076 COMP 1,664 NDX 1,250 RUT 502 BKX 868 SOX 515 NWX 214 IIX 99 DOT 128 XAU 78 XOI 540 OSX 108 A point/counterpoint (J.T./marginmike) Lower (marginmike): Point: 1)dollar will continue to fall causing money to leave US market 2)There is no recovery beyond inventory rebuilds from 9/11, when people realize this they will finally acept that forward Earnings estimates are 30-40% to high 3)Earnings estimates are 30-40% to high 4)Sentiment In VIX, in Equity/bond ratio's and Aii survey show people are still wildly bullish. Vix new trading range seems to be a myth and it needs to go to 30-35. IMHO 5)The happy denial and refusal to sell stocks is rampent amongst everyone I talk too. I need real capitulation, where people swear off stocks, and get defencive 6)Terrorism risk is not priced into the market, one bomber at a Mcdonalds and all hell will break loose 7)Credit levels are at an unsustainable high here, and rates cant go much lower, there is not enough gas in the car 8)Us govt acount defict and trade imbalance must finally be paid reducing growth levels substatially, and lowering ability of fed to keep rates artificially low(see#1) 9)Tech stocks and old econ are vastly overvalued BY ANY METRIC 10)Technichally every indicie is in the process or has broken down, many individual stox and some index's like the BTK>X have. In my experience where one goes they all go. I learned that from you in 1998. 11)Rydex numbers though extreme have been very bad indicator of late, and though I think its great I believe in indicator failures in big market moves. 12)Liquidity is drying up as fed realizes it cant keep pumping, this is very similear to 1999-2000 post y2K where fed stoped the pump. This more then anything else is why I remain very cautious. I could go on, but I think there are some good points. Most are do to liquidity drying up. **************** Higher (J.T.) Counterpoint: 1)Dollar is putting in lows. Elasticity toward either side of 114 and reversal. It is Triple oversold on 5 day RSI. More stringent test 21 day RSI right above oversold. Without US growth and consumption, the spillover to asian markets ala Korea, Taiwan and Japan wouldn't be thriving like they are... 2)Inventory rebuilds are on the mend, albeit slowly. The market looks forward not backward. Forward earnings are going to be easy comparisons to beat. 3)Earnings estimates are low-balled right now. The majority of any estimate revisions are going to be adjusted and ratcheted higher going forward. 4)VIX trading range is going to get crushed over the next 12-18 months. High teens are going to be commonplace... if not too high. Today is a telltale sign.. VIX 23.05 close. You are correct on II; but in aggregate Rydex, MV and consensus are closing in on september lows in many ways. 5)You got real capitulation into September lows. It blew 87 and 29 crash capitulation levels as measured by unheard of quintuple oversold RIS levels and record CBOE E/I Put Call ratios. We continue to have high ratios not uncommon in the .8 - .9 range and occasionally closes above 1. Capitulation has hit the bigs last... GE, IBM, QCOM, MSFT adnauseam. They have been left for dead when the bigs are hit last and the smalls and mids are in healthy uptrends... nowhere to go but UP. 6)Good News is NOT PRICED in. Got GDP Growth today? What happens if news hits sunday night that bin laden is DEAD? Got MELT-UP? Got the mother of all SQUEEZE Plays? Bad news is well priced in. It is priced at a premium. 7)Credit levels are improving. We are well past the midpoint of bad news. The market looks ahead and sees the light at the end of the tunnel. From the bottom up, companies are cleaning up balance sheets are they will be next on the firing line. 8)This argument has been perpetuated since the 80's. It has been tossed into the dust bins. I got real good 80's reference here, but I am not much interested in econ academia. 9)Point well taken on tech stocks. But tech stocks have no clear forward earnings visibility RIGHT NOW. They will have much clearer visibility within 2 qtrs. The market looks out 2-3 quarters (6 -9 months). Tech is clearly oversold and now is a good time to buy the right tech stocks. A case by case basis. 10)DOW is in defined uptrend. Still 2000 points off the bottom. RUT higher. SPX right on support. Monday reverses UP. COMP ala tech V-shaped reversal dead ahead off these lows. And my fav... BKX still 85 + points above my magic number. BKX 868 now... We will see BKX take out 1,000 by the end of THIS YEAR. 11)Many are still confused how I use Rydex and Bullish tags. I refuse to divulge rydex analysis to the public since many only want to discredit rdex as a sentiment tool. Nobody was talking about rydex sentiment day in day out on Silicon Investor until MITA commenced day in day out repetition. Now it is talked about everyday. I give credit where credit is due and have noted in the archives where the credit for this idea commenced. My trading in rydex will improve, and in spite of all my shortcomings I finished a Bear year in rydex UP. I will finish this year positive and outperform the major indices, just like last year. 12)Market liquidity is now well buffered by strong public short positions. Supply of capital stock has shrunk immensely because of disappearing acts of worthless paper that never had any value. Y2K overbuild has almost fully worked its way thru the system. The market looks forward, and 6-9 months this build-out will be in expansion mode. Regardless of what happens, we will make money in the market. The market is always right. I will bring this to a vote deadline Sunday 6 pm est on another thread: Best Regards, J.T.