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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Boplicity who wrote (52748)	6/6/2002 7:50:26 PM
From: stockman_scott	Read Replies (2) \| Respond to of 65232

SELLING CLIMAX IMMINENT By Harry Boxer, The Technical Trader (www.thetechtrader.com) Considering yesterday’s promising close, it was certainly disappointing that the market started off at the get-go with a hard drop-down in the morning. That was spurred by the Intel downgrade by Merrill Lynch. The indices went down and tested Tuesday’s lows on the Nasdaq 100 and the S&P 500 and then did some mid-day firming. But, for the most part, most of the rest of the session was spent going sideways with some last hour firming, and even that was hit near the very close. So we ended down badly on the day, but more importantly the S&P 500 went to a new low for the year and closed very negatively. The NDX and DJIA managed to hold their prior lows, but are very tentative in here. We’re now in danger of getting a nasty spill over and perhaps a selling climax as early as tomorrow. We failed miserably at resistance late yesterday and we’re still in a bearish down channel and we can obviously still go lower. The odds are looking more and more like we’re setting up for a spike or crash low. A review of today’s indices showed the Dow down 172 points and just 30 points off the low. The S&P 500 closed 2.5 points off the low, down nearly 21. The Nasdaq was down 40 and about 4 points off the low. So it was an ugly day today. Technicals bore that out with 968 advances and 2,465 declines on Nasdaq, with an up/down ratio of 4-1 negative. Total volume was about 1.55 billion shares. On the NYSE, total volume was about the same with even more down volume than up. There were 246 million up to 1.3 billion down. So we obviously had a negative day today. My personal board was, not surprisingly, mostly down. There were just a few gainers: Little OmniVision gained 36 cents and continues to act excellent in a very poor market. Qualcomm was the leader on the downside, down 2.08; Mercury Interactive was down 1.87; Broadcom was down 1.42 and a few others were down between 1 and 1.25. On the gaining side, Microsoft managed to inch into the plus side late in the day, up 24 cents. But, for the most part, that was the only meaningful gainer today. The NDX has been dropping steadily now for three weeks and it’s down about 200 points with not more than a one-day rally. Also, we’ve had three legs down averaging about 100 points per leg. I strongly believe we are very close to an important low, but it will most probably come from a lower spillout level. As a result of this evening’s additional negative news from Intel, the futures are very sharply lower overnight & we may very well see that climax as early as tomorrow morning! Good trading! Harry

To: Boplicity who wrote (52748)	6/8/2002 9:03:52 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

The End of Irrationality (an article complements of the Gorilla & Kings website) Alan Greenspan started it. In a speech to the American Enterprise Institute on December 5, 1996, he made his infamous “Irrational Exuberance” quip. Ever since, ‘irrationality’ has been the sound bite for the economy and financial market. First, the ‘irrational’ technology bulls and their corrupt Wall Street accomplices consumed billions of dollars of capital while driving the NASDAQ from 1500 to 5000. Now, the ‘irrational’ bears have closed the capital markets for technology while driving the NASDAQ back down to 1500. The irrationality stops now. The cycle we have just witnessed is nothing new. The boom-to-bust cycle has repeated many times over the past two hundred years. New technology fuels this cycle. Since the first commercial steam engine, the economic promise of a new technology attracts too much capital. The result is a boom and inevitably boom turns to bust. The previous boom-bust cycle happened from 1980 – 1984 with the introduction of personal computers. Previous boom-bust cycles, on the scale of the Internet cycle, have happened with the automobile, railroads and canals. The real economic impact of new technology is not seen until after the bust. Growth is built on top of the technologies and companies that survive this cycle. In fact, this is the function of the boom-bust cycle. The boom feeds a burst of innovation and competition as differing versions of the new technology compete in market. The boom accelerates the maturation of new technology through this process of hyper-competition. The capital starvation of the bust forces a switch from technological innovation to economic innovation. It is the application of the new technologies, not the development of the technologies themselves, which spur sustainable economic growth. The technological-driven growth following boom-bust cycles is both robust and rational. In the decades following the invention the boom/bust cycle, industries form, populations migrate, social structures transform, and a new class of wealth creators emerge. Contrary to popular belief, the role of technology in driving economic growth and wealth creation was not just recently discovered by Paul Romer and the Chicago school of economics. The great Viennese economist, Fredrick Hayek and Joseph Schumpeter, did not first discover it. The critical role of new technology in creating wealth has been well understood by entrepreneurs and their financial backers since the beginning of the Industrial revolution for two hundred years. Occasionally, a bust is exacerbated by disastrous monetary policy mistakes, as in 1932 in the US and the late 1980’s in Japan. While people of good faith can argue over the wisdom of fiat monetary policy, there is no evidence of disastrous monetary policy today. Throughout the Internet boom-bust cycle business productivity continued to increase. Unemployment rose to no higher than 6% during the recession. Inflation is low and the threat of deflation has been eliminated. Interest rates are low. The US dollar is beginning to return to a healthier level. Household incomes and household debt service are growing at the same rate. The economic recovery has slowly begun and it promises robust growth. Enough of the technological utopians promising a New Economy untouched by the messiness of free market capitalism! Enough of economic doomsayers threatening the collapse of the western economy! The era of irrationality is over and a new era wealth creation has begun. The shamans and hucksters of boom and doom have been replaced on center stage by the entrepreneur with vision and spirit. Let the true Internet economic boom begin. It is in this spirit that, beginning in July, the RTW Report will publish a two-part report on the history of the technological boom/bust cycle and how this history can illuminate the current state of the Internet revolution. The first half, “The Mother of All Chasms” will expand Geoffrey Moore’s market development model to cover the entire history of Information Technology. The promise of information technology has yet to be fulfilled but the industry is at an inflection point, enabled by the Internet, when investment in technology will begin to produce healthy returns. This report will examine the challenges and opportunities ahead for the technology industry today as it begins to deliver real economic benefits. The second half, “The Long Harvest” will present a mutli-decade model of technology maturity, drawn from examples of previous technology boom-bust cycles, to demonstrate that we are entering a long period of prosperity fueled by the Internet and the risk taking work of thousands and thousands of entrepreneurs. This period of prosperity is “The Long Harvest”, when the fruit of the seeds planted during the boom/bust cycle are gathered.