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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (20023)	3/20/1999 5:40:00 PM
From: dennis michael patterson	Read Replies (2) \| Respond to of 42787

Bert Dohmen: Bert Dohmen's Weekly Hotline March 19, 1999 The DJI 10,000 level continues to be a significant obstacle. Several times during the week the national media had to put the balloons and champagne bottles back into the closet. Late Thursday the DJI did manage to move above 10,000 for the second time, but at the close it was still about 3 points shy of that psychological barrier. Everyone assumed that it would be a cinch to close above that level the next day. On Friday, the market quickly spurted upward above 10,000, but by the close, the DJI had posted a loss of 94 points, closing at 9903. Friday was a so-called triple witching day, in which options on stocks, indices, and the futures expired. In the middle of the day, when the market looked fine, Morgan Stanley downgraded the outlook for IBM. IBM quickly plunged more than 9 points. Merrill Lynch rebutted the bearish opinions with bullish arguments. I don't want to accuse, but the IBM downgrade was very peculiar in it's timing. Maybe the SEC should check what positions the firm had in expiring index options today. On a technical basis, today's reversal is cause for some concern. It occurred on very heavy volume. However, because it was not preceded by an extended period of high volume days, I conclude that this is not the final top. It is much more likely that we'll see a short period of weakness to be followed by another upmove. At an important and final top, the specialists on the floor of the exchange reverse their positions from long to short. They can only do that on high volume, and it takes more than one day to complete the job. Therefore, it's important that sufficient enthusiasm is created first so that the specialists have buying demand from the public against which to sell short. So we have a situation where we could see a couple of days of weakness in the market, to be followed by another brief upmove into month end. The strength of many internet stocks today suggests that the market is not yet ready to tumble. Today's pullback, and further weakness early next week should generate a lot of renewed short-selling and put option buying,. This would provide the fuel for the next rally, although it may be short. The DJI may not close substantially above the 10,000 level for some time. It's time to start raising cash. In conclusion, the market is still in trading range which started in January. Although the DJI has made consecutive new highs, that's only 30 stocks. Other major indices have made no headway, and have even declined. The broad indices, such as the Value Line, and small cap indices look ghastly.

To: dennis michael patterson who wrote (20023)	3/20/1999 6:46:00 PM
From: Challo Jeregy	Read Replies (2) \| Respond to of 42787

Dennis, it depends on the time frame we are talking about. We could both be right. This is the way I read it and I have to add the caveat - BWTHDIK! AOL is currently at 118.75, after a midday high of 120. It is a high pole formation in P&F, with sector at 70%, and would retrace 50% of its most recent climb. The last move up was from 86 to 120 (ouch for those of us who missed it!) That is 34 points. 50% retrace brings it to 103. And, keep in mind next week. I think AOL can add another 3 to 5 points max. Maybe 2-4. Then, Carpino's April drop. I don't see April being the big one, though. Depends on outside influences. Here is where I'll be watching. I'm kind of thinking that GS might, just might, take back that last 1/4 point that he gave us last fall. He has made reference to that fact. In which case, I would expect to see a bit bigger correction (10-15%) Or, if he doesn't do anything, (ie: no further rate cut), the market might not like that and drop 5%. Now, this AOL retrace is s-t only. If dow drops 5-10%, we'll see about AOL. It is the leader right now, so if J6P doesn't panic, sp-500 won't drop too bad, nor will AOL. If we go back up May-June, AOL will pop again, s-t, cause J6P may think it's over. A further decline in July-August, and a worse one this time, will bring AOL down more. A rise in interst rates in Aug-Sept causes the crash in Sept-Oct. Then we get AOL at 60! (Don't forget - last July-Oct, AOL dropped 50%!!!!) How does that scenario sound? More important, do I want to try to play the s-t moves? If I can get AOL at 60, I'll (maybe) mortgage the house!!! <VBG>