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

To: NickSE who wrote (9702)	4/4/1999 7:43:00 PM
From: NickSE	Respond to of 99985

Profits for Fortune 500 Firms Dip newsday.com NEW YORK (AP) -- Profits at the Fortune 500 companies declined for the first time in seven years in 1998 as U.S. companies suffered the effects of the economic crisis in Asia, Russia and Latin America. Overall, profits for the 500 fell 1.8 percent last year, compared to 7.8 percent earnings growth in 1997, according to Fortune magazine's annual listing of the largest U.S. public companies, released Monday.

To: NickSE who wrote (9702)	4/4/1999 7:46:00 PM
From: NickSE	Read Replies (3) \| Respond to of 99985

Stock Averages Set High Standard newsday.com NEW YORK (AP) -- In the new math of the late-1990s stock market, the averages are way above the norm. This strange statement probably doesn't sound very informative at first. But it goes a long way toward explaining why the stocks and stock mutual funds you own may be having so much trouble keeping up with the Dow Joneses. The prominent stock market averages and indexes have all reached new milestones of late -- Dow Jones's 30 industrials at 10,000, the Standard & Poor's 500 at 1,300, and the Nasdaq composite index at 2,500. Because of the way they are calculated, however, all these measures of market trends are dominated by a small group of big stocks that have been hogging most of the glory. By many broader gauges, the stock market has been losing ground lately, rather than climbing to new heights. "For the last year, institutional favorites have vastly outperformed the broad list of stocks," notes Philip Roth, technical analyst at the brokerage firm of Morgan Stanley Dean Witter & Co. "Non-institutional favorites have not only lagged badly, they have fallen." Roth points out that the Value Line arithmetic index, encompassing about 1,700 stocks, posted a loss of 7.7 percent over a 12-month period through late March, while the S&P 500 was gaining 18.2 percent and the Dow was rising 11.2 percent. By numerous other measures, such as running tallies of the number of stock rising and falling each day in the New York Stock Exchange and Nasdaq markets, the market has been weakening for a year or more. In the last full week in March, 684 NYSE and Nasdaq issues made new 12-month lows, while only 228 hit new highs -- for a negative ratio of 3 to 1. "The divergence between the average stock and the market averages has rarely been greater," observes the newsletter Dow Theory Forecasts. For anybody who wants to keep track of what is happening on Wall Street, this point is much more than just some statistical quibble. It's a key factor, for instance, in understanding why S&P 500 index funds have been so popular lately: They have produced performance that is far above average. In addition, the gap between the averages and the average stock demonstrates how tricky it can be to try to base your own investment decisions on some perception of whether "the market" is overvalued or undervalued. If there is no single trend story that covers all stocks now, it's illogical to expect all of them to react the same way when the pattern changes at some point in the future. So it happens that right now you can see "momentum" investors jumping aboard the blue-chip and technology rockets, even as "value" investors grimly hold on to depressed bargain buys that have gone nowhere. "The realities of the marketplace dictate that you look at contrarian investments now," says Timothy Vick, who edits the newsletter Today's Value Investor. "No amount of hyperbole or chants of 'this time it's different' can invalidate the methods by which you should judge an investment. "You must decide for yourself in which camp you fall -- momentum or value. The stakes are high if you choose wrongly. More than 70 percent of all stocks have fallen in price since March 1998." No single market indicator can measure all the crosscurrents. So even if you invest in an index fund, the results you see with your money may be a long way from average.