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

To: yard_man who wrote (34883)	12/3/1998 12:01:00 PM
From: Paul Shread	Read Replies (1) \| Respond to of 94695

tippet, I hope you're wrong, for the effect it would have on all of us. However, I would point out that this is the third time the market has registered four straight double-digit gains, although admittedly not of this magnitude; it did so twice back in the 40s and 50s, and each time all that followed was a period of consolidation for a year or two. We had a PE of 26 in 1991; by 1994 it was down to 14, and the market posted gains in 1992 and 1993. As long as the economy stays this good, corporate profits will at some point take care of the valuation problem. I do see inflation as the one threat to this market; I think the Fed cuts, the money supply growth and the Euro dollar launch could fuel inflation here in the U.S. a year or so down the road. But for now, real inflation is about 0.5% in the broadest measures, with GDP continuing to register decent growth. That's an astonishing combination. Corporate profits will rebound if that continues. I do not consider deflation to be a serious threat; if we get to 173 on the CRB, I will take that threat seriously -- that would wipe out an entire generation of consolidation. I agree the manufacturing sector is in trouble; I'm also glad their importance has diminished in recent years. BA itself does not trouble me; they were having problems when demand was booming. It's their fourth warning this year. No surprise there. Good luck to you too. Paul

To: yard_man who wrote (34883)	12/3/1998 5:57:00 PM
From: Bull RidaH	Read Replies (3) \| Respond to of 94695

Tippet, We're in treacherous waters now, which is why i wasn't willing to go long any index derivative from Tuesday a.m.'s low. i would have been stopped out 3 or 4 times by now. That's also why i'm trading only lightly long with stock only (no options). From the 1150SPX low Tuesday, I had us beginning a 5th wave up with a most probable target of 1190SPX or just under that, but with a minimum target of 1168. We made it to around 1176 twice now, and have stalled out. The minimums have been met, but we may still have more rally ahead. As long as we don't trade below 1150 for more than 30 minutes and don't go lower than 1145, and don't close below 1150, i have to give the upside the benefit of the doubt. We may already be finished with the rally, and a break of 1150 will confirm that. However, we may have only completed the 1st & 2nd waves of a 5 wave move from Tuesday's low, with the 2nd wave being completed on today's close (forming a possible ending diagonal). If that is the case, a rally could easily extend into early to mid next week before the final high is seen. I'm still holding my CCI & CPQ positions, but I'm hedged entirely by BEARX holdings, which is definitely a core I won't be letting go of anytime soon. Thus, even if we do head down from here, i won't feel the pain, as i've got good profits in CPQ and booked profits from MSFT to absorb the blow. I will close longs and return totally to the short side if any of the above 3 criteria are met. But I would much more prefer to close longs and go longterm, megashort at 1185-1190SPX, and I still give it a 60/40 chance of happening. Regards, David