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

To: Les H who wrote (9996)	4/6/1999 2:53:00 PM
From: HairBall	Respond to of 99985

Les Horowitz: Aaaahhh, as usual you offer up some common sense...<g> Regards, LG

To: Les H who wrote (9996)	4/6/1999 3:06:00 PM
From: Robert Graham	Respond to of 99985

Yes, this pattern bythe market of blowing off of earnings warnings as you note is a good indication of very bullish market sentiment. This is also why I mention that the thought of a runaway or overheating economy is a perverse notion to me. There has been an earnings slowdown in many key companies of the broader market for several quarters now. I see this as a stage of market denial, an attempt to reconcile their bullish sentiment with the reality that continues to creep into their view. I have found that the market goes through several stages of denial before touching upon the reality of the situation. What is more interesting is that by the time the market bgins to succumb to reality, the economy has gone trough a short term cycle and now there is some evidence of strength in the economy for these people to look at. Of course the same companies that were severely downgraded have now shown a pattern of meeting their earnings estimates. No surprise here. Bob Graham

To: Les H who wrote (9996)	4/6/1999 5:24:00 PM
From: pater tenebrarum	Respond to of 99985

Les, earnings are not really an important factor in determining market direction. true, individual issues can get temporarily killed if they miss their numbers, but there have been numerous instances in history where bull markets were in force while earnings were declining and bear markets reigned while earnings were up. what really counts is liquidity - and the proper psychological backdrop. i would even go as far as saying that continuing worries about earnings contribute to the 'wall of worry' that the market needs to go up. as long as the fed happily keeps on printing money, there's really only one way to go for this market. a serious decline is of course not out of the question - but it would require an exogenous event, either a worsening in the 'known' situations (such as kosovo), or more likely something entirely unexpected and therefore unpredictable. this doesn't mean we shouldn't analyze the market beyond money supply growth,since the market somehow senses unforeseeable events before they occur. but i wouldn't put too much emphasis on current earnings overall. hb