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

To: StockOperator who wrote (9652)	4/2/1999 5:04:00 AM
From: Rambo	Read Replies (2) \| Respond to of 99985

SO, I am a lurker most of the time on SI, but this post of yours and all the info presented on this thread is nothing but 1st class...and, as a reader, I commend you and this whole thread. <bobr>

To: StockOperator who wrote (9652)	4/2/1999 11:22:00 AM
From: Sonny Blue	Respond to of 99985

SO, excellent analysis! I have the same thinking but could not put into words the way you do, concise and insightful!

To: StockOperator who wrote (9652)	4/2/1999 2:06:00 PM
From: TWICK	Read Replies (2) \| Respond to of 99985

What's your take on NSOL ? It also appears to be ready for an explosive move to the upside IMHO. Twick

To: StockOperator who wrote (9652)	4/3/1999 1:41:00 PM
From: pater tenebrarum	Respond to of 99985

i agree with your assessment here. as a broker friend of mine has recently pointed out to me : 'everytime msft breaks out to new highs, the market as a whole tends to eventually follow suit' as you say, the leadership in general may have changed somewhat, but rotation is after all a hallmark of this bull market. a very important indicator for the market's health is the continued strength in financials. laszlo birinyi, who analyzes money flows (i will post more on laszlo and other mavens later on - stay tuned) has identified four financials (axp,sch,jpm,mer) and five techs (aol,aapl,ibm,lsi,mot}as having the strongest money flows. i believe that in the short term the ominous market internals, the kosovo situation, the weakness in the long bond, worries about earnings, fear of the big number (10000), all provide us with what the market needs to climb even further : the famous 'wall of worry'. i noticed that almost every down day in the market is greeted with a marked increase in put volume, which tells me that there is not as much complacency out there as many claim. please note: this is a very short term view (1-2 weeks). you mention 'just let the market tell you where it is going....' well, the market has already told us something: it has broken out of a congestion zone to the upside, not long after a bunch of well known wall street strategists were calling for a 10% correction. i am also keeping a close eye on three overseas markets: the hang seng, the ftse, and the helsinki hex. the hang seng is tied to the u.s. via hong kong's currency board regime, which effectively links hong kong to u.s. interest policy; the ftse has performancewise a strong historical relationship with the u.s. market, which tends to work regardless of the respective economic cycles; the hex has a recent history of predicting moves in the nasdaq comp. all three of these markets look pretty healthy right now. still, in spite of all this, i am looking for a short term top to develop in the not too distant future. what i will be looking out for is an increase in conviction among market participants. the evidence i am waiting for looks as follows: 1.an improvement in the a/d - line. how could it come about? my guess is that several of the depressed commodities will start to follow crude higher-which will revive the basic materials sector somewhat. in fact, there are so many beaten down stocks out there that it is reasonable to expect that some bottom-fishing will occur soon. once that happens we will see many of the technical analysts who are urging us to be cautious now come out and laud the 'broadening out' of the advance. 2.changes in asset allocation models of major wall street firms. many firms have adopted a more cautious stance due to their strategists well-publicized worries. increases in equity allocation coupled with calls for higher prices by the aforementioned correction-minded lot will raise another red flag. 3.unusual options activity. specifically i'm looking for 2-3 days of 'panic' call buying on individual equities in the face of sharply rising call premiums, coupled with one day of extremely strong oex put volume that dries up the very next day, ideally while stock prices are still rising a bit but losing momentum. i have observed many times that this is apparently due to smart money attempting to pick a top. a strong day with individual equity put/call ratios well below 0,40 and oex at 2 would indicate that this is happening. 4. alan abelson, barton biggs and bill fleckenstein all turn bullish <g> from their current 'befuddled' state. that'll be the day!<g> so long for now, blasnik