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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (5549)	2/6/1999 11:46:00 AM
From: Cymeed	Read Replies (1) \| Respond to of 99985

<<< It was obvious that money was leaving the NAZ with the strong pullback, but some of that money, not all of it, was moving into the sectors which have pulled back strongly already like the cyclicals. Prop up the cyclicals by the big boys so the market cant tank too much. If it catches fire by baiting the small investors and moves up - thats great for the big boys, but if it continues down, well they made profit from selling the high techs and they took a calculated risk. >>> I agree with you that money was at least partially rotated from techs to cyclicals; I disagree with you that somebody did this intentionally to "prop up" the index. It's true that people might do this kind of prop-up things some day some time, but I doubt this to be the occasion. With economy way hot (5.6% GDP and much higher job creation) even before the effect of the 3 FED rate cuts (which should fuel economic growth 6~9 months down the road after the cut took place Q4 98), people have reason to be cautious in future interest rate environment. In that environment, cyclical and basic materials turn to be a better bet than those high PE tech stocks. At the same time, the cyclicals and basic materials stocks are trading at or below their book values. The rotation seems logic to me. Maybe i am wrong ?