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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: P.Prazeres who wrote (13065)	1/11/1998 9:47:00 PM
From: P.Prazeres	Read Replies (3) \| Respond to of 94695

Here are some thoughts for tonight: Everywhere one turns this weekend , there is negative sentiment to be spread around for three bear markets. Barron's is pretty bearish this weekend, SI's participants are very bearish , the Investor Intelligence Sentiment Indicator on Jan 7 (wednesday) was down to 45.9% bulls (a very low reading), the American Association of Individual Investors survey of Jan 8 has only 42% bullish on the maket. Then there are what could be some breakdowns in the major averages. Last week's newsletter talked about the Nasdaq making a stab at taking out its 50 day moving average and that if it could hold, that area would provide resistance. Well, 1590 was taken out but it certainly didn't hold. The big problem is that not only didn't the 50 day MA hold, the 200-day MA of 1513 also was violated on a closing basis. This condition can't exist for very long if there is going to be any chance of a recovery from where the Nasdaq is now. If there is any encouragement about the nasdaq, it is that the 200day MA is still moving up. The same can't be said about the 50dayMA. There is talk this weekend about the Dow revisiting its October lows of 7000 or so. If that happens , it is a worse market condition than it was back in October. Any visit to that area would have to be followed be a vicisious snap back rally to 7600. Why? The main reason is that back in October the Dow's 200day MA was about 7380 or so. The Dow sold off through that level on Monday, October 27th...continued down Tuesday the 28th and then rallied back through that level on Tuesday afternoon. Now the 200day MA is 7634. The 50day MA is 7785. The Dow has already closed below its 200day MA. It can't go much lower or close below this for too long before a domino effect of selling begins. Many technicians use the 200day MA for major market support. Violating it is an ultimate sell signal. Tomorrow will be a day of reckoning. From what the Asian markets are doing early this evening, it seems that some selling will occur in the morning. If that occurs, a reversal would be necessary by midday to keep the selloff from feeding on itself. The headlines on the TV this weekend state that "the White House is keeping a close eye on the Asian markets this weekend". You can bet that the Sec of the Treasury , the Fed and the rest of their staffs are working overtime this weekend. Noone wants to allow the US market to fall into a tailspin. If it looks like that early on tomorrow, expect some major announcements from the Fed and/or the treasury and also from some of the large corporations. I am sure that some of the CEO's and CFO's have been getting calls this weekend from their friends in Washington. In August, I remember writing on SI that "everything looks too expensive" (especially in the tech sector). Today, there are bargains to be found almost everywhere one turns. Once again, many of the techs are at prices that make them attractive even to value investors. The bear maket in some of these stocks has been very cruel to them. Some are off 50, 60 +70%. Is the slowdown in Asia going to kill the tech sector? I find it hard to believe. It is even possible that a pick up in demand in Europe could make up for some of the slack in Asia. I also think that there is going to be a new wave of computer buying in the US this year with people either upgrading to the Pentium II machines (for Windows 98) or for people getting a computer for the first time....yes, the first time. A few years back, when the Pentiums started rolling out , there was a wave of consumer buying in computers. These consumers were mostly the "tech geeks" - me included. The "everyday John and Jane" still didn't see a need for a computer and the $3000 price tag was a barrier. however, from my own personal experience, more and more of the blue collar working families are finding that they also want a computer, especially since they can now buy a better machine than I bought just two years ago for about $1500. Two of my cousins, and two of my brothers in law are asking me what types of computers should they buy. Pentiums 233's are there preferences. If this is more than a coincidental family trend , then the techs may very well be the surprise winners in 98. Only time will tell. Paulo check out www3.edgenet.net

To: P.Prazeres who wrote (13065)	1/11/1998 11:00:00 PM
From: James F. Hopkins	Respond to of 94695

Paulo; It may prevent a panic, but I don't think it will lead us up much, if at all. If something is going to turn equities around it's really got to start in the U.S. , if that happens Korea will likly fly high. I was in KEF but bailed out, now untill I see the U.S. markets start back I don't want any falling knives, or try for bottom fishing. When I bought KEF it looked like our market was going to rally..BTW with hind sight I like the looks of KF better than KEF but they can both wait till I see this markets Mega Caps go up. Jim