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

To: GROUND ZERO™ who wrote (31891)	10/18/1998 11:39:00 AM
From: Gersh Avery	Read Replies (2) \| Respond to of 94695

GZ Any idea why AAPL acted the way that it did? It posted very very good earnings yet slid back. Gersh

To: GROUND ZERO™ who wrote (31891)	10/18/1998 1:34:00 PM
From: Lee Lichterman III	Read Replies (2) \| Respond to of 94695

>>I agree that earnings will be disappointing, but I also suspect that the worst is already factored into market price and anything better than the worst will be welcomed by a rally.<<< I have been biting my tongue for weeks but ... Earnings are lower, the future economic outlook is bleak, we just had the first negative S&P growth in years yet stocks are back to making new highs and you are projecting a rally to old highs on the indexes. How can you say this is priced into the market already? Micron hasn't made any money in years and loses 1/4 million dollars a quarter yet it is still in the 30s. IBM just made a new high this week despite weak foreign sales, PC sales are projected to be slow next year and demand is already showing a slowdown now yet DELL is trading at a value for earnings 60 years from now. Yes the market could rally as it has in the past ignoring fundamentals but there is a pin outside this bubble and we are inflating towards it everyday. We are only a few good trading days from old DOW highs. Heck we gained over 500 points this week alone!!! The only reason the indexes are climbing is because of the liquidity being pumped into the market by both the Fed and Mutuals. Mutual funds have to be fully invested and Joe six pack is guaranteed a 50% return due to matching funds from the employer. He doesn't care if the market does or does not perform because of the matching fund provision. However, the non 401K money is not so stupid as to keep buying into this. As I believe William Hueb pointed out a while back, it won't take money exiting the market to stop this rise but just a lack of new buying. This market has been acting on the higher bidding sucker theory for years. I know the market is over valued but there is another sucker out there that will buy this higher than I am buying it now. Sooner or later, there will be less suckers, then what? I don't think any of this is priced into the market. I think the smart money will be bailing on this rise as they get a second chance to get out. Those hurt by the last drop will be happy to get out even, and short sellers are being given a gift of getting to short/buy puts at higher prices. I don't doubt that this rally can or will continue short term but reality is going to show it's face again hopefully before the end of the year. I am sticking with my projection until proven wrong that all we have done is gone back in time to last earnings season to repeat the cycle. We will wait for DELL and the other late earnings announcements, then taking the earnings projections out of the lime light focus on the economy. Elections will be over with here and Asia will start to slide again since the Japan Bank reform is turning out to be a joke. As Japan slinks below 13000 and stays there, Korea goes back below 300, we will start to wobble here and the channel we are in now will start approaching the lower limit. We will drop to our old lows and since it is from a now higher level than before, 7400 will fail. Note those charts that were posted here earlier. I shudder with fear everytime I look at my charts and have seen the same giant head and shoulder formation forming over the last few years. This market has traded a hundred years and built up averages over that time through good times, bad times, war and famine to the industrial age. The last few years we have gone way outside those averages to the upside. to use Don's Guitar string analogy, we have been stretching that string way up for a long time. Averages built over that long a time period don't just go away. We MUST return to that norm at some point and irrational exuberance can't and won't last forever. Even if this market is being held up by 401K money, what happens when the layoffs accelerate? I have been reading allot about the lay-offs in silly valley, the brokerages, banks, factories. The economy is no longer healthy and the corporations can't afford to pay high scholl drop outs 40 dollars an hour to do unskilled labor anymore. It is cheaper to shut plants down and move them overseas. With each of these moves and all the brokers and traders not getting bonuses this year, that is less money being pumped into the economy. That will also be less money in 401Ks which means less money propping up the indexes. The snowball that has been being rolled up the hill is appoaching the top and when it comes down the otherside, it will be fast and furious. Even Cinderella's chariot became a pumpkin despite the fact she was having a good time. We are enjoying the market now, but midnight is approaching and with the way world economies are evolving recently, no one can stop the clock. AG knows this and he is not cutting rates to make new highs on the DOW. HE is trying to save a few buddy banks and inflate an airbag at the bottom of the high open windows on wall street before the bodies start flying out of them. He knows the day is coming and he is merely trying to save as many as he can. The question is when will it start raining? The FA is the worse it has been in a long time yet FA doesn't time the market, TA does. But has anyone really been paying attention to the giant H&S formation? When this finally hits, we will all go back and say, darn why didn't I pay attention to this? Hind sight is always 20/20. We are playing the short trends and the intermediate trends but there is a larger formation out there we are all ignoring because we can't fathom the thought of what it is projecting. To be honest, either can I. Lets all make money, Lee