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Strategies & Market Trends : Jim's Nasdaq100 Special as a basket. -- Ignore unavailable to you. Want to Upgrade?

To: Monty Lenard who wrote (396)	4/17/1999 11:22:00 PM
From: Vitas	Read Replies (1) \| Respond to of 2103

Monty, thanks for posting the charts. I was thinking of Jim's theory during the week. With the Dow up while spx and Naz fliers were getting whacked, I was convinced that they were trying to make the market look good to the late IRA money coming in. I remember Jim's infamous "sell everything" call last July 16th. There is one thing different, in that the over 200% figures had already been deteriorating slightly over the previous week, while now they are leaping upwards. The other is that the SPX was being propped up at the time, ever so slightly, by the dogs, while the the fliers were being sold. Here we have had not much masking of anything, at least within the SPX itself. I'm waiting for the word from Jim. Vitas

To: Monty Lenard who wrote (396)	4/18/1999 1:20:00 AM
From: James F. Hopkins	Read Replies (3) \| Respond to of 2103

Hi Monty; Look at the crossed swords one month chart of SPY vs MDY quicken.excite.com --------------------------- Remember over a long time frame..the MDY cannot beat the SPY, it's in the nature of them and that's just as solid a rule as there is in the market. The MDY will lose it's best runners, the SPY don't. OFten the MDY will out run ( for a relatively short time span ) the SPY, but it can't keep it up, and it's very bad sign when they actually cross swords , the long term winner going down while the MDY is going up, it's against the nature of the market sure it happens but thats the signal trouble is afoot. If the MDY just moved up through the SPY that's not a crossed sword, and not all that unusual, but she is gaining at the expense of the blue chips and there will be hell to pay when she dips. ------------------------ To get the picture just keep in mind that if you were going to sea and couldn't look at the market you could hedge the SPY long and the MDY short equal dollars and never worry, you would make from 10 to 20% a year over time. It's built into the way they are weighted, and how the best of the MDY winds up in the SPY anyway. IT's a momentum market and will stay that way as long as index funds are cap weighted , the grass grows, and water flows. There may be shake ups from time to time but it will always come back and behave the same way if you give it time. ------------------------ How far these swords can cross I'm not sure but I do know they will wind up crossing again but going in the other direction before it's over. -------------------------- The SPY vs MDY is easier to show than what happens inside the S&P, but it's much the same principle, DOGs are dropped out and new runners brought in, the ones sinking tend to sink, and vanish..but the winners get bigger and bigger..at some point they don't grow as fast, or move as fast but they still SIGNAL the longer term trend of the over all market. the tail can wag the dog but the head signals the next market direction. ------------------------------- Could this bad sign rectify itself ?? yes there is a chance it's not a good chance but it could happen..The war could do it or a drop in interest rates..but let Spam up rates and you got a fair little correction already built in. I'm not even sure oil will be safe if she breaks support. --------------------------------- Longer term; about 1 to 6 months after this war winds down however long that takes we will likely see the biggest percentage correction since 87 ...then after that a buy on the 10 bigger caps that were trading the highest volume prior to the correcting will make money even if we have a bear market. And the Long SPY short MDY will still work (it won't make you rich but it will work ). Now while the one month chart shows the swords crossed, the Year to date still shows how it works over time, and even if half or more of that gets gone, the MDY will give it back in time. quicken.excite.com That's sort of how the Head/tail works. Let me know if the NYT hypes oil, or if CNBC hypes it up, I switched from the ESM I bought back in FEB to the XLE, and doubled up. I don't want to pick stocks, I want the safety of the basket..in longer time frame it will out do the best stock pickers anyway, as the trading cost is less and it will also kick out the bad ones on it's own, and pull in new runners. They do want it to shine, and in time it will sure A few stocks may beat it , but for how long ? and what about the losers you get..this thing is weighted so I don't even have to do that. I like the XLK and it's done good but it has hardly no internuts in it, the QQQ will over time beat the XLK..right now I'm scared of the QQQ and in oil for sake of safty..and also not to miss all the upside IF we are to get more. As from FEB 1st I've been real cautious., and will stay that way until I see these crossed swords right themself. Jim PS if you look at it for the last year you see it's made 20% That's not setting the world on fire, but keep in mind It's A hedge and damm near as RISK free, as you can ever get. If you go in dollars balanced..as even if the market does crash I assure you the MDY will crash more than the spy, in any big crash and the short on that end is what takes out the risk.