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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Crimson Ghost who wrote (16061)	7/26/1998 1:51:00 PM
From: Simon	Read Replies (3) \| Respond to of 18056

Kind of wait and see what is going on. Why try and pick the absolute bottom. The crystal ball is rather murky at present.

To: Crimson Ghost who wrote (16061)	7/26/1998 2:43:00 PM
From: Crimson Ghost	Respond to of 18056

Decline still has a long way to go according to Victor Weintraub NOTICE: Victor Weintraub will be on CNBC on Monday August 3 between 3:30 and 4:00 PM July 25, 1998 SHORT TERM RATING: 5 UNATTRACTIVE INTERMEDIATE TERM RATING: 5 UNATTRACTIVE PERIODIC CONTRACTIONS OF SIGNIFICANT DIMENSIONS Don't blame the market sell off this past week on FED Chairmen Greenspan and his testimony before Congress. The sell off was already in the market before he spoke. Last week I went extremely negative on the market and again nailed a significant market turn. The fact that I can do this with some consistence indicates that the market does not react to news but rather that news is an excuse for market action relied upon by the popular press. Last week the Stock Market had a very bad time of it. The DOW lost 400.61 points (4.29%), the S & P 500 lost 3.87%, the NASDAQ lost 3.87%, the Wilshire Small Cap lost 5.78% and the Russell 2000 lost 5.14%. Market internals were horrendous as you would expect in a sell off of that magnitude. The Advance-Decline line averaged negative 985 daily. New lows averaged 164 daily and were at their highest number on Friday when there were 245 new lows. The daily average for new highs was only 66. These are extremely weak numbers. Volume expanded into the sell off and then contracted as buyers took cover and the market declined in a vacuum. The secondary averages were weaker than the blue chips. The charts of many of the Gorilla cap market leaders seem to be breaking down, they are really just a bunch of big Monkeys. MARKET SEGMENTS have swung modestly to the oversold side. Of the 78 only 17 are positive (rated 1 and 2), 28 are negative (rated 4 and 5) and 33 are neutral. This is not an extreme and is inconclusive. The FIRSTCAPITAL OSCILLATOR (FCO) is at 49 down from 58 last week and the Inflection Line is at 28 down from 57 last week. Both are declining rapidly in sync. The FCO went negative as of the close on Monday July 20. The Put/Call ratio is at 0.65 and the P/C ratio for the OEX is 1.10. This indicator gave a negative with values of 0.59 and 0.95 on Thursday. The Option Volatility Index (VIX) is at 23.13 up from 16.88 last week and hit a peak of 25.26 mid day on Friday. This obvious change of direction of the VIX is a negative. There were extremely high negative tick numbers all week, the highest was -1447 at the low on Friday. Ticks did not appear to be indicating a support level. In summary the short term emotional indicators are negative. Although I had expected that last week would be a large down week, I was surprised by the momentum and severity of the decline, it was more than even I anticipated. There is a high possibility of a waterfall effect this week like we had last October. This decline is not near being over and as yet there is no indication of support building, no sign of a bottom yet. I would not expect to see a bottom until the FCO goes below 20 and then gives a confirmed bottom indication. This is the kind of market that will kill the buy on the dips gang. There appears to be a lot of momentum behind the decline. The question is where is the first bounce going to be. It is a good bet that the major averages will easily penetrate their June lows and continue lower. I would expect the major averages to penetrate their 200 day moving averages (DOW 8400, S & P 500 1040 and NASDAQ 1730). It is worthwhile to note that the Russell 2000 is around even for the year. This appears to be an important market top, it is not prudent to buy the dips to try to play a rally. This is very high risk and on return land. Charts of the S & P 500, the NASDAQ, the Wilshire Small Cap and the Russell 2000 are at the bottom of this page. This gives you the opportunity to compare the Gorillas and the Monkeys. The long term DOW CHART has been updated as usual. To see the chart just click on the link. For the mid year revision to the ECONOMIC REVIEW just click on the link. If you are a speculator or trader I think that it is time for the sidelines. My advice to intermediate and long term conservative investors is that the market is still very highly priced and over extended and due for a correction. The market has had a parabolic hyper extension. There is a high probability that we will see a contraction in high P/E ratios later in the year. Prudence dictates the sidelines for those concerned with capital preservation and those who are cognizant of risk verses reward. This is a high risk and expensive market. The CONSERVATIVE INVESTOR STRATEGIC ASSET ALLOCATION is as follows: BONDS 50%, STOCKS 0%, CASH 50%. Cash means short maturity bonds (under two years).

To: Crimson Ghost who wrote (16061)	7/26/1998 7:33:00 PM
From: Thomas M.	Read Replies (1) \| Respond to of 18056

Some words of wisdom: ...a rig is an unusual asset. If there is no work for the rig, and prospects for work are dim -- this is no longer an asset. It's a liability. It is one of the amazing things in life to see the price of a rig rise and fall to extreme levels. I give the example during the 80's when we sold the same rig two times in one year...once at 112 million and once at 8 million. Same rig, different oil prices... Moral: It all comes down to your oil price forecast. #reply-5318161 Tom