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

To: Investor2 who wrote (19398)	5/28/1998 5:57:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 94695

Given that we are in a down market, I think there is more underlying support to this market than some here at SI seem to believe. Yesterday, there was an attempt at a program trade that was made at a juncture with the market challenging its intraday low. After the program trade, there was "backfilling" type of price action on the DJIA indicating there may be more underlying buying interest than the program trader may have expected. So shortly after this, program buys began which netted a larger change in the index and help the market to recover most of its losses in that day. This is impressive considering the market was down about 170 points at one time. I am sure this received the attention of some of the bears in the market. Now, we have an up day today that challenged its intraday high near the magic number 9000. What is interesting here is that even though buying interest did not step up even after the program trade that brought the index down a notch, it appeared the bears did not step up to the plate either continuing the selloff. Perhps this was just because of the timing of the program sell right near the end of the day? I do not know. However, I think tomorrow will reveal more. Furthermore, given this as a down market, the volume and breadth figures were better than I expected on this up day. This included A/D and the spread between up and down volume, which started to increase later this morning. The money movement in the market today appeared to be primarily into the techs, and not even the leadership there and some of the more well-established second tier stocks like HWP and TXN. The money appeared to move to what I term as the more minor "sentiment" driven stocks like SUNW and WDC. I will include AOL in this group since IMO this is a sentiment driven stock that is bought into by the public at large. So this is just the return of the public speculator to their familiar stomping grounds and IMO is not significant as far as helping to determine the direction of the stock market. The public speculator is the last to figure out that the "music" has stopped. Mice in mazes learn more quickly than this group. I still see this as a down market that will challenge its previous lows and perhaps even 8750. The course the market will take at this juncture will be very telling for the near term future of the market. If the DJIA breaks through 8750, then a test of its 200 day MA is possible which would make the predictions made by the bears of this thread come true. But even if this happens, I do not see this as the beginning of a long term bear market. I would tend to classify it as an intermediate term top. But a break below the 200 day MAs by the key indices (DJIA, S&P 500 for example) will definitely call this into question for me. Comments welcome. Bob Graham

To: Investor2 who wrote (19398)	6/1/1998 10:47:00 PM
From: Bilow	Read Replies (1) \| Respond to of 94695

Hi Investor2; About those cpu box makers and vertical integration... Yeah, I think the public no longer needs or wants the latest and greatest (and most expensive) PCs, and that is why Average Sales Prices are dropping and why I expect them to continue to drop to unheard of levels. That will make CPUs into a true commodity, one where the winner is simply the guy with the lowest cost of making huge numbers of identical boxes. Certainly not build to order and ship one at a time. The natural pick for this would be MUEI for 5 years from now, as MU can provide them with a little more vertical integration than the other box makers... But the chip service people won't get integrated any more than the machine tool makers got integrated into the big 3 autos. Machine tools have a large enough niche to not get absorbed. By the way, the talk of those bulls whose argument as to why we will not have a crash is because we haven't already had one reminds me of certain conversations I may or may not have had as a high school student... -- Carl