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Strategies & Market Trends : Bear! -- Ignore unavailable to you. Want to Upgrade?

To: Michael Burry who wrote (72)	5/15/1998 9:56:00 PM
From: Les H	Respond to of 271

Yes, I am starting to short stocks in this market: TWLB, AEOS, MDY, SYNT. The risk on the Dow/S&P is about 7% and the OTC about 12% (using the 200-day mov avg as reference). The market actually peaked in late March/early April according to the following signs: 1) The McClellan Summation Index has been declining since early April for the NYSE and NASDAQ. It measures breadth in the market. 2) The AIQ New High/New Lows Indicator (39-day moving total) topped in early April. For the Nasdaq, it is back to January levels. 3) The RSI and Stochastic have been making successive lower highs (about 5) since late March for the S&P and the other major averages. 4) The short-term moving average (21-day) is flat to down for the major averages. They are also converging on the 50-day moving averages. 5) The database I maintain of IBD industry groups had 100 industries making new 52-week highs in April 4, now it is down to 20. 6) The weekly RSI has been declining since April for the S&P and Nasdaq which confirms declining momentum. What's left is for the weekly Stochastic to give a sell signal for both by moving out of the Overbought territory (the SK-SD has already crossed over the prior week). 7) The major averages have non-confirmed the highs of early April: Dow, SPX, Nasdaq, Transports. Dow Theory usually gives two months from that time till the decline. The 50-day moving average has been tested twice by the major averages and the IBD mutual fund index (the mutual fund index may have broken it today). A breakdown through it and the previous reaction low of 8860-8900 followed by an failed attempt to recover back above would probably accelerate the decline.

To: Michael Burry who wrote (72)	5/15/1998 10:15:00 PM
From: Les H	Respond to of 271

Buffett says U.S. stock prices need rosy scenerio NEW YORK, May 14 (Reuters) - Billionaire investor Warren Buffett, chairman of Berkshire Hathaway Inc., said in a taped interview released on Thursday that a rosy scenario was necessary to justify current share prices. The comments, made May 8 in an interview taped for television, were released on Thursday and will air May 16 on ''Adam Smith's Money Game,'' a public television show. The comments were released as Berkshire Hathaway, Buffett's diversified holding company, announced that earnings surged to $722 million, or $582 per share, in the first quarter, from $284 million, or $231 a share, in the year-ago period. The company, whose main holdings are Coca-Cola Co., Gillette Co., American Express Co., Walt Disney Co. and McDonald's Corp., saw its realized investment gains soar to $470 million from $21 million. When asked by interviewer Adam Smith if corporate profits could continue to grow at current rates, Buffett said: ''I don't want to bet on it continuing. But I am saying that if it does continue then stocks are not overvalued, but it takes a rosy scenario to justify these prices.'' Buffett said he did not think stock prices had much margin of safety now. ''It leads to caution,'' he said. ''But it doesn't predict a bear market.'' ''I don't think there is much of a margin of safety in stock prices right now,'' he said. ''No, there is not a margin of safety.'' Buffett also commented on the recent wave of massive merger deals, saying when asked that they were partly driven by the egos of chief executives. ''It is not fun if you are a CEO to look around and see your competitors or colleagues making deal after deal and being plastered all over the press and to sit there and say, 'I don't think these deals make sense,''' he said. ''And you have got other constituencies urging you on.'' When asked about derivatives, Buffett said it would be nearly impossible to regulate them at this point. ''They are here to stay and I think regulation would be almost impossible,'' he said.

To: Michael Burry who wrote (72)	5/16/1998 11:11:00 AM
From: Kip518	Respond to of 271

next week? nwlink.com

To: Michael Burry who wrote (72)	5/18/1998 10:56:00 PM
From: White Shoes	Read Replies (2) \| Respond to of 271

Dear Michael, there was an analyst on CNBC last week who said something to the effect that his firm was interested in value but note NB!!! when "we value Coke pretty much as we value a bond, we find that Coke's stock is still undervalued". Well, I don't know what he was smoking or what he claims is value, or whether he has even heard of Ben Graham, but you two clearly are at loggerheads here! What do you make of this?