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

To: Chris who wrote (13297)	7/28/1998 11:06:00 AM
From: ViperChick Secret Agent 006.9	Read Replies (3) \| Respond to of 42787

LOLOL where is the Jerry Favors rally to short????? we just keep going down...

To: Chris who wrote (13297)	7/28/1998 11:07:00 AM
From: Ms. X	Respond to of 42787

Here is a little tidbit... Message 5335435

To: Chris who wrote (13297)	7/28/1998 1:27:00 PM
From: Robert Graham	Respond to of 42787

I have always wanted to see up close a great boat like that go down in the ocean. Of course without the people on board! Shall we pull up our chairs with our wine coolers and ice teas in hand and watch this phenomena of a bull market struggling to stay afloat? Can someone pass me a beer? ;) From hindsight, much evidence was there that this would turn out to be a false rally. First, there was a split in the directions money went. One group with negative sentiment over the market went into the blue chips and defensive issues. Another group went to the techs for reasons that had nothing to do with fundamentals. The funds there were rightly expecting the public money to follow them in which is what happened. Money went into the some of the "bellweathers" of the tech sector. This got the attention of those who played the low caps and had them move back into the tech sector. This speculation first showed up as plays on Internet stocks. Next this showed up as speculative action on more substantial stocks that normally would not see this type of speculative action. This even impacted some tech stocks outside of NASDAQ like LU. When LU started to be speculated with in this fashion, this is a strong clue that something is off here. As a result, the NASDAQ lead by the Internets and other speculative issues went up in a very strong rally with several days of price gains involving no pull back. This is another clue as to who has control of the rally: the public speculators who are the weak hands. Market internals remained poor but started to improve a bit right near the end of the rally. Meanwhile, the DJIA did not follow the NASDAQ up until the latter part of the rally. When the NASDAQ continued to leave behind the DJIA, further accenting how those two groups of stocks have become disconnected, this was another strong clue that the market has changed. Now how far up can the rally go when a good amount of the money remains in the DJIA in conservative positions? Also consider this money is there due to the negative sentiment many were feeling at the time? Also, the funds would be ready to take profits as the speculators move the NASDAQ up. I think their move into the tech NASDAQ stocks was designed only to be a shorter term play in the market. Look at what was leading the market: speculative stocks like the Internet stocks. This should fo provided everyone with a strong clue as to the duration of this rally: fast up and fast down. Essentially a blowoff mini-top. Much of the longer term money was in DJIA type of stocks. The earlier breakdown of the DJIA down to 8550 was a significant event that definitely validated the pessamistic sentiment in the market at the time and alarmed others. It is a technical event that never should of been taken lightly. The hedge funds rocket launched the Dow back up, but this was the hedge funds playing on the protection their PUT options gave them in the market. This is an artificial cause of a rally. Eventually however, enough of the market bought into it to continue that rally. But many did not. Back then when the market touched 8550 and bounce up from there still closing below the last significant support, I knew that the way the damage this price shock as done can be dealt with by the market would be for that price level to be retested and validated as an actual bottom. Healthy markets tend to do this. If a market moves up from such an episode without consolidation and an eventual retest of the low, the rally which follows should be looked at with sceptacism. The market internals and the defensive positions maintained during the rally, and the stocks that lead the rally all validated that this was indeed a false rally. My regret is that if I would of paid more attention to following the market, I could of seen all of this evidence earlier. But a it is, the breakdown to about 8550 along with the poor continuing market internals and the growing gap between the DJIA and NASDAQ were some evidence to me that something was up. Only when I looked closey at the exuberance behind some of the tech stocks that are part of the rally, which mirrored the rally itself, did I understand that it was a bad time to play the market. Bob Graham