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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Stephen who wrote (3508)	12/22/1998 3:01:00 AM
From: Stash	Read Replies (1) \| Respond to of 90042

Steven, Just concerned about the next two days. Upside Breakout Imminent NEW YORK, Dec. 21 (Standard & Poor's) - The consolidative market action has now reached 18 days but we think a break higher is near. We have been talking about seasonal strength starting at the end of December and lasting into or through January. This should take the market averages firmly into record territory but probably represent the last breath of the current intermediate term move. An eight-month cycle high is expected in February with the next cycle low not projected until mid-1999. Any move to new highs during January should therefore be used to lighten up on equity exposure and take a more defensive stance. One very important reason we expect another surge to new highs is the markets reaction to news. During this past week, the market was bombarded with bad news. The impeachment debate heated up, the U.S. attacked Iraq, and some major large capitalization stocks announced disappointing Q4 forecasts. The market hardly flinched, and in fact closed higher on the week. When the market ignores bad news, it is almost always bullish in the short-term. As we have mentioned over the last few weeks, sentiment gauges have clearly issued major warnings about the market so we are watching the market internals and chart patterns of the major indexes and stocks very closely for signs of trouble. While market internals have clearly weakened, they are not yet issuing danger signals. The number of new lows on both the NYSE and NASDAQ will have to expand quite a bit before we will have any major meltdown. The advance/decline lines will have to exhibit more serious damage before a big decline can set in. Volume patterns, while weakening, are not yet in the danger zone. This all suggests that we have one more run before the current trend ends. Chart patterns on the major indexes are merely indicating a consolidative state, and suggests that the intermediate term trend is intact and the next move will be higher. Major stock charts also look bullish with many individual stocks either in nice uptrends or near breakout points. While we would never suggest waiting around for the last 100 points or so, we believe the potential reward warrants staying in for a bit longer. Sometimes the last part of an intermediate term move can be quite profitable from the long side. REGARDS,Stan