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

To: Sun Tzu who wrote (8241)	3/15/1999 9:50:00 PM
From: Zeev Hed	Respond to of 99985

Sun, because of the highly institutionalized market and much broader dissemination of information, I believe the cycle will be completed in a shorter time (like seven years) but I count the first mini bear the 20% decline we were served last year. Note that the Russell 2000 is not even close to last April highs. I believe that the macro economics that will drive this stagnation will be the drastic slow down in the world engine of growth, the developing countries and the wounded Asian tigers. Until these economies resume their growth to absorb the very large excess capacity still in place (everywhere from Steel to silicon wafers and DRAM), we will have decline in investments, and inability to price goods profitably by many sectors. The CRB is still in a major down trend as we speak. Last, the current valuation is getting quite extreme on the "major averages", those that support this market's new high in the DOW and S&P. The only counter argument I have (and thus after a Spring Relapse getting us possibly to around 8400 on the Dow by late June), is another major rally in the second half of this year, this rally, I believe will be driven by excess liquidity, one of the main sources will be the partial reallocation of close to a trillion dollars in Japanese savings now stashed away in the Postal system. I figure that the markets (world wide) will have to "absorb" some $500 billions annually, $200 Billions as 20% of those Postal savings and about $300 Billions in interest paid out by our own treasury. That is what is going to, IMHO, prevent any major bear market (by major I mean an 80% to 90% predicted for so long by some super bears and big Kahuna proponents). Yet, I see a wave of annual declines , first mild like last years 20% retrenchment, than somewhat deeper like 30 to 35% retrenchments and then one or two recession induced bears of close to 50% from the then last high. Just my turnips' long term opinion, of course, these are worth what you pay for, 2 cents or less (VBG). Zeev