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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (10587)	6/21/1998 2:54:00 PM
From: sean sanders	Read Replies (2) \| Respond to of 42787

Chris, a couple quick questions ... First how was your trip? and how does it feel to be done!? also, don't laugh at this question, when people plot the DOW are they plotting the DOW Jones 30 industrials? If so, well quotes plus doesn't have volume on indices, it appears we have a saucer (rounded top) shaped pattern forming - implication being, some down time coming up. Also I know this was mentioned previously, but it also appears that we have a longated H&S pattern in the NAZ. Sean

To: Chris who wrote (10587)	6/21/1998 3:22:00 PM
From: Sonki	Read Replies (1) \| Respond to of 42787

chris, forget about a bear. We are gona make a new high before the fall. i m not being a chear leader here but this could be a long debate. in bear market i would not be in bonds. If rising % rate causes the bear market bond is a bad place. if i could see a bear market, i would move to cash and heavily move back into stocks in the bear market. My hoirizon is very long. i don't need to make a living off the market. chris, we have all heard of sector rotations. maybe this new era of bear come in this formation(sector) Currently SOX is almost in a bear market. Maybe if Sox will do well in second half (due to asia), then we will have a fear of rate hike and all the finanical will go down for 6-8 months. Then drugs will have their day w. the bear etc... so overall if your are in the "market index" i.e. spy, u will feel no pain no gain, and if u r in the wrong sector u may see a bear market. if u r smart enuf to predict the next sector u can ride all up wind tides. So we may have a bear who is rotating in a sector? what do u think? chris, i beg u to start looking plotting ^ndx, it will open ur eyes. ^ndx was up 1.01 , dia was down 1.18% SPX AND ^IXIC .05+/- ndx statyed in +ive all day please see ^ndx intra day. I also ask that you start charting dia and spy intest of dji, spx. This will show u volume. on yahoo, u can only get one day chart of NDX so only way for me to see more then one day chart or 3 mo chart is if u start plotting this info. Most of our stocks, msft,dell,csco are represented by this index. ok got to run to pick up my son. He is doing volunteer work at SF emergecy hospit. p.s. R U completely done w. school? pls. come and see me if u come here. thx.

To: Chris who wrote (10587)	6/21/1998 5:00:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

As long as funds do not start moving their money into bonds in any significant way the market will more likely endure an "adjustment", not a significant market correction. I would not consider anything less that 10% as a correction. This would mean a total of at least 900 points which would bring us about to the 200 day MA support of 8350. So far we have experienced a short term bear market. If the market continues back below 8750 and reaches down toward the 8350 value, I think we will be in an intermediate term bear market. This IMO would still be considered a long term bull market, but a bear market on short and intermediate time horizons like that of 6 to 9 months. So lets suppose this market turns into an intermediate term bear market which I think is becoming the case. Since this market adjustment started in April, and this is a market that has formed an intermediate term top, we have at least until October or longer to go with this. If lower prices are maintained by the market, the effects from this market adjustment will stay around longer before a rally is in place. If we were to see a large and continued movement of money to bonds on the heels of a further market adjustment, then there may be a chance for the market to turn into a longer term bear market which may see DJIA values of below 8350. This slow rollover being made by the market is less likely to induce this type of panic and associated movement of money. The negative sentiment in evidence by the larger monies have also helped discount the market adjustment to some extent. Another element of this picture is money flows into mutual funds by the public. If the public gets spooked and starts to liquidate some of their mutual funds holdings, the downside will be worse and more volatile since the mutuals will be forced to react by an urgent liquidation of holdings. After all, the mutuals have maintained a low cash position during this bull market. However, it is the buying public the last to figure things out. For that matter, the market rollover probably is not being met with much pessimism by the public. This is particularly true with the public speculator. The public speculator probably sees in their optamism the increased volatility as generating buying opportunities: what goes down must come up, right? Look at the renewed interest in the techs as many go bargain basement hunting. The funds know this so I would not be surprised if they have been continuing to move money into select tech stocks before the move up by the NASDAQ market. But this action on the funds part is in anticipation of the reaction be the public speculator which they can later sell into when the funds remove their money out of their short term holding positions. I think it is the larger money and longer term interests that have been taking a more pessimistic stance over time. This group is more value oriented, and there have been continuing downgrades of key stocks by analysts in what has been thought to be an overvalued market to support their more defensive market position. This group by the nature of their approach takes in more of the bigger picture and I think as soon as a few quarters of earnings warnings and disappointments came followed by the across the board downgrading of earnings estimates by the analysts of the S&P 500, more of this group have been positioning themselves in defensive positions. Only a few weeks ago did we see obvious evidence of this as large amounts of institutional money went very quickly from the NASDAQ to defensive positions in DJIA and S&P 500 stocks. The foreign investor has been for some time know doing the same with the movement of their money from Asian markets to the stocks of the DJIA. For that matter, this is one reason why some see optamism in the markets while others see pessimism. Each is looking at a different group of market players which is giving both type of observer evidence to support their bullish or bearish theories of the market. The market volatlity is not helping much here either in allowing the market participants to see the evidence they are looking for to support their pet theories. Still it is a wonder that there are many market players that see the economy "rip roaring" strong when such a pervasive amount of fundamentally related news has come out of many corporations experiencing a marked slowing in earnings growth which as been in evidence for several quarters now. I guess these people need to see things right at their doorstep before permitting themselves to see the obvious. Such is the mentality of the public speculator. Furthermore, there were apparently many in the market seeing the strong economy leading to a natural outcome of inflation and Fed interest rate hikes. In actuality, the Fed has continued to keep short term interest rates the same, and their has been more evidence of deflation than inflation. Such is the outrageous denial of your average market participant. IMO the more intelligent trader at best would be cautious and on guard for continuing signs of a market rollover in this eroding fundamental and technical market situation, and would be less likely to commit themselves to a bullish stance for the near term. Perhaps this is a good point to perform a "reality check" in relation to the market prognosticators found here at SI unless they can provide very good evidence to the contrary. And even then it would be an important matter of timing. It is not a good idea for a trader to take a bullish stance when the market is in the middle of a market adjustment even though he feels that a bull market is coming "real soon now". I think the two day break through of 8750 by the DJIA is significant. Couple this with ample evidence of an eroding fundamental picture and continued problems in the Asian part of the globe including the renewed interest in the Japanese economy and its woes. Do not let the bounce back above 8750 fool you. IMO the very short term oriented hedge funds were predominantly responsible for that extended market move. Still, as long as the S&P 500 stays intact I do not think we will see any longer term market adjustment. However, this is the time to take a step back and take a look at the bigger picture. What has been the pattern in this volatile and apparently "unpredictable" market? Overall I would say lower highs and lower lows that have compramised significant supports at 9000 and 8750. The fundamental picture is continuing to erode, and I have not seen any improvement in market sentiment except for the recent renewed interest in NASDAQ. However, I suspect we are primarily seeing the public speculator in action in the midst of their bargain hunting. IMO the market is still in the process of rolling over and will continue to erode until the big money steps up into a more aggressive posture in the markets. I am not surprised the S&P 500 is remaining intact. After all this represents much of the defensive positions that have been in the recent past taken by the large money in the market as a haven. Why would these large market players be just as willing to leave this type of position several weeks later with both the fundamental and technical picture remaining the same? The DJIA is impacted not only by fund money playing defensive positions but also the foreign money moving into (and out of) our markets. IMO the S&P 500 will continue remain intact until one of two situations happen. One is that the market players step up the selling of stock and movement of this money is made out of the market to the bonds. The other possibility is when the market has bottomed and money is moved out of defensive positions and into more aggressive growth oriented positions which can involve stocks in NASDAQ including the mid to smaller cap stocks. So I think key questions are the following. First, what are the funds doing with their money? Are they maintaining a low cash position with most of their money in stocks, or have they been placing their money into cash, or worse yet, bonds? Second, what is the public doing as far as their fund positions are concerned? Are they starting to liquidate their fund positions, or are they continuing to ride this market adjustment out? What is the public speculator doing with their money? Are they moving with some interest back into the high techs as indicated by the buying interest in the NASDAQ market? What stocks is seeing much of the public interest, the Internet stocks and other fundamentally "unproven" and speculative stocks? What position is the professional trader taking in the market? Are they fading rallies? Or is the professional buying into the rally near key areas of resistance? Just some thoughts to ponder. One interesting note that I have just remembered. A few months ago, there was a significant increase of corporate bonds being offered in the market which with its higher interest rate payments is in competition with the Fed Treasuries. Now why have corporations chosen the less desirable debt instrument over floating more shares of their stock? What impact can this have on future interest rates? Comments welcome! Bob Graham