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Strategies & Market Trends : Tech Stock Options -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (41321)	4/26/1998 1:58:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 58727

I think the key to the near term future of the stock market is the 20 day MA. If the market bounces off of the 20 day MA and ushers in renewed fund buying, then it is "business as usual" and the market will show strength. If the market slides past its 20 day MA, then I do think this will give evidence of a larger market adjustment in action. What I mean be this is a move to the 50 day MAs which may end up in a more prolonged consolidation by the S&P 500. I also think that this will lend credence to my thinking that the funds have moved their part of their cash position into select tech stocks as a holding place for their money until they resume their sector rotations, which mean that they will be the first to get sold off when the funds finish up with their sector rotation. Even though I am still not 100% convinced of my assertion here, I think I have seen funds do this before during temporary market transitions since they think they must keep their cash working in the market. I want to note that it appears some money from the stock market moved into bonds. I think this is because of the recent activity in the long bond interest rate. For instance, the foreign investor in our markets IMO tend to be more interest rate sensitive, and the temporary move of the long bond above 6% may have attracted some of this money over to bonds. There are other interest rate concerns being demonstrated by the market like the recent and sudden interest in gold and oil stocks, and stocks from the basic materials sector which is where commodity related stocks are like aluminum and steel. Perhaps there is a segment of the market that is becoming a bit more pessimistic and cautious over this market and the prospects of higher interest rates which can have its effect on the market and the economy. We still have the "exuberant" market players out there that the action on the Internet stocks have pointed out to us. This polarization of market sentiment can lead to a break in the market if more players take this conservative position based on their growing fear of higher interest rates. Even if this were true, timing is always the issue with something like changes in sentiment and when it has its impact on the market. Any thoughts? Bob Graham