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

To: Death Sphincter who wrote (17747)	4/30/1998 9:43:00 PM
From: robnhood	Respond to of 94695

Sounds good to me. <ggg>.. Whats that they say about the best laid plans? Ah, what did that guy know anyway.. russell

To: Death Sphincter who wrote (17747)	4/30/1998 10:31:00 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 94695

Carl et al, on the subject of the Fed, did anyone notice the M2 report this afternoon? Reported after the close, it shows a continuing surge. In the Barron's column "Current Yield" (page MW7 this week), renewed attention to the money supply, and the problems with it as a policy guide, is discussed at great length. One factor possibly contributing to the surge, according to Barron's, is capital flight from Asia into US$ assets (among other factors). Suggested reading. Also, the following is from Briefing.com: Analysis M2 continues to gallop. Against its Q4 base it is growing at an exceptionally quick 7.9% clip (fourth column in table below) and on a year-over-year basis it is growing at 6.6%, its fastest pace of the cycle (not shown in table). Take note: There will be no deflation as long as M2 sports growth rates like this. In his February Humphrey-Hawkins testimony Greenspan mentioned that Fed governors and Reserve Bank presidents pretty much expect M2 to grow in the upper half of its target range (1%-5%) this year. It has now been exceeding the upper range of its target since August. While G and others are probably not overly concerned about this, they are paying more attention to M2. Note the following comment from H-H testimony. "In recent years, there have been tentative signs that the historical relationship linking the velocity of M2--measured as the ratio of nominal GDP to the money stock--to the cost of holding M2 assets was reasserting itself." Data Month \|M2 Level \|Growth mo/mo \|Growth vs Base \|Fed Target Mar $4123.4B 8.3% 7.9% Feb 4096.1 9.7 7.9 Jan 98 4064.6 7.5 7.1 Dec 4040.2 7.0 5.7 1%-5% Nov 4017.5 7.6 5.6 Oct 3993.2 6.0 5.4 Sep 3973.8 6.5 5.3 Aug 3953.1 9.9 5.2 Jul 3922.0 4.3 4.6 Jun 3908.2 4.9 4.6 May 3892.7 0.8 4.6 Apr 3890.0 6.7 5.3 It's amazing that everyone was so focused on the ECI (the whole week seemed almost orchestrated to produce a rally on the ECI news - am I being paranoid again?) that they totally ignored the GDP report, so I guess no one noticed M2 either. Bob

To: Death Sphincter who wrote (17747)	5/2/1998 4:58:00 PM
From: Bull RidaH	Read Replies (4) \| Respond to of 94695

Carl, You're a naughty...naughty...boy!!! Coming up with a new alternative after we finally figured we had something sweet enough to sink our teeth into!! :o) 1142.3 to 1081.5 on the June S&P is a 5.3% correction all day long, and it took 15 TRADING DAYS to complete, not 3 days. And everybody and their brother, from Ralph Encampora to Joe Schmoe was looking for an even larger, more protracted correction, and many still are (I guess you might have missed last monday & tuesday on CNBC...the consensus of bearishness amongst the analyst was overwhelming). These are my top reasons now for believing April 27th was indeed the end of the Primary Wave 2 correction. I'm going to throw in a couple of technical pattern analysis & recognition techniques that I've never told anyone about for corroborating evidence, so just remember...you owe me! :o) 1. The wave count you spelled out in your private friday afternoon post that I "signed off on" is perfect in form and methodology, and gives overwhelming evidence as to why the C wave down ran out of time to go further down. 2. Remember, the beginning of this move up from Nov.13th was not only the beginning of Primary 1 up, but it was also the beginning of Cycle Wave 5 up of the Supercycle that began in August '82. Corrections within wave 5's are notorious for being shallow & brief. In fact all wave completions in a 5th wave move become more accelerated, which has now caught me by surprise three times..(intermediate wave 4 of primary 1, intermediate 5 of primary 1, and now primary 2). 3. The primary fundamental basis for the corrective action since the 6th of April has been the backing up of 30yr. bond yields from 5.6% to nearly 6.1% a week ago. Notice in the past couple days how the yield tumbled back down to 5.9%, and it appears as though the top in the yield is in, and we could be moving back towards 5.5%. This would be nearly a 10% drop in yields from the 6.1% area, and as you probably know, most Wall streeter's valuation models have stocks leveraged 2 to 1 versus the bond yield (barring no changes in earnings & earnings expectations). Therefore, stocks would be as much as 20% more valuable with yields at 5.5% as they would be at 6.1 %. So take a good look at your bond chart, and see if you don't see a continuation of the decline in the yield forthcoming in the next couple months. Fundamentals stand strongly behind this move lower in yields, with a sizeable GOVERNMENT SURPLUS, Japan having liquidated a good bit of their holdings behind us now instead of a threat, no raise in German rates, a dollar that has tumbled from 102+ on the index and now is 99 (a better buy for foreign investors), inflation still hovering in the 1 to 1.5% annual range (giving a 4 to 5 % spread on the 30 yr. over inflation, one of the highest in the history of our indebtedness). 4) There are only 2 bottoming formations seen at the end of a correction. The most common is a double bottom (July '96), but also very common is the Ascending Triangle (Late October '97). As you well know, a large scale Ascending Triangle formed between April 27th & 29th, with the breaking of 1103 activating the initial target of the pattern which was 1123.50. Consolidation at that area was to be expected, and now that 1123.5 has been cleared, typical continuation strength from that bottom will be realized, at least into the 1138 area (which I believe will complete this intermediate wave 1 up of primary 3 up). 5) Now for the final blow that convinces me that we've seen the end of the Primary 2 corrective move down. If you'll get your daily chart of the SPX futures out (cash will work as well). Starting at the 2/17 highs, run a trend line across the highs from 2/17 to 2/26, and let this line continue up so that it connects with the 3/25 high as well. Now draw a perfectly parallel line that connects the bottoms from 3/5 and 4/1, and let that line extend on up. This of course forms a channel. Now you see the lower line was broken on 4/8. Any channel break that occurs immediately targets a price objective for the move outside of the channel. In order to determine the target of a channel break, measure on a perfectly vertical axis from the bottom of the channel to the top of the channel (the width of the channel). I show this channel being 35.7 S&P points in width. on 4/8 I show the break of the lower channel line was at 1119.7 on the June S&P. Subtract 35.7 from here, and you get your target of 1084. The low for the move was 1081.5, well within the tolerances of a succesful run to the target and subsequent reversal for this pattern. This was the applicable target for this correction, instead of my previously stated "double-top" variation target, because the first top (4/6) occurred while prices were still in the channel. 5) A trend reversal "coil" pattern formed on 4/27 between 11am & 1pm. Take a look on your 10 min. charts. If large enough, and this one was, this is the pattern that usually signifies the end of every large move, when it comes at the end of a trend. This same pattern signified the end of the Aug.-Nov. '97 correction when it showed itself on Nov. 11th, the day before the end of the correction. I am right with you, in that we could see a nasty correction from the 1138 area on the June s&p starting monday or tues., but I am sticking with this read, and believe it will be an intermediate wave 2 down correction that could retrace as much as 50 or 61.8% of the wave 1 move from 1081.5 to 1138 (or wherever wave 1 washes out at). Lemme know what'cha think!! Regards, David