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

To: bobby beara who wrote (13586)	5/11/1999 5:23:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Bobby, i guess you're right. the rotation into the cyclicals has been so broadly accepted by now that they do seem ripe for a correction, and the money has to go somewhere. i also think that some buying of bonds will re-emerge soon, since everybody seems to think that a 6% yield is a foregone conclusion. regards, the zoo watcher

To: bobby beara who wrote (13586)	5/11/1999 5:55:00 PM
From: Vendit™	Read Replies (2) \| Respond to of 99985

Bobby, I would like to see the neat AOL chart. Please send me the information and I will get you a link to post. Vendit

To: bobby beara who wrote (13586)	5/11/1999 7:57:00 PM
From: J Krnjeu	Read Replies (1) \| Respond to of 99985

Mr. bobby beara, I would like to see that neat AOL chart. Thank You, JK

To: bobby beara who wrote (13586)	5/11/1999 8:15:00 PM
From: Vitas	Read Replies (3) \| Respond to of 99985

The Clash of Cycles In our view, the most dominant intermediate term cycle in the stock market over the past two decades has been the 9 month cycle, (AKA the 40 week cycle). This particular cycle has some unique personality quirks which sometimes make it hard to understand, and this is perhaps the reason why it is not widely followed outside technical analysis circles. We will try to give our understanding of these quirks and what they mean for the weeks ahead as the market moves to the next cycle low. Like all market cycles, the 9 month cycle seldom makes bottoms or tops exactly on the day when it is supposed to, and the tops are much more variable than the bottoms. On the top chart on this page, we have aligned the vertical grid lines with our idealized cycle lows, and the arrows point out when the actual price lows appeared with respect to these cycle bottoms. Perhaps the most interesting personality quirk is that since 1989, every third cycle low is less important than the two which preceded it. This is highlighted by our designation of 1, 2, and X bottoms where the X bottoms are the less significant ones. Prior to 1989, every fourth bottom was less significant, and we cannot explain why it has switched to every third one. The cycle bottom ideally due in July is scheduled be a type 2 bottom, so it should have a somewhat significant impact on the major averages. We do not look for a big decline like we saw last August, because that instance saw the 9 month cycle bottom coincide with the 4 year cycle bottom, and the combined power of the two amplified the downward price movement. We find ourselves in an analytical pickle when we try to reconcile the expectation for a downward cyclical bias in the stock market with the upward expectation given by the Presidential Cycle Pattern shown below. There has been very good correlation lately between the SP500 and the Pattern, but for the market to decline into July as the 9 month cycle projects, it would have to move in opposition to the Presidential Cycle Pattern. BOTTOM LINE Even though the third year of a presi- dential term is supposed to be an up year, there are still the normal cyclic ups and downs to worry about. The stock market should see a top May 11-12, followed by another one May 17-19, and which one is higher depends on the reaction to the May 18 FOMC meeting. We expect a drop of around 10% in the major averages (more in the Nasdaq) leading to a bottom cur rently due July 12-16. T-Bonds are very close to making the final low for this down move and may have done so by the time you read this. We look for a drop in interest rates (rise in bond prices) lasting until August. Gold stocks are so far beyond overbought that we do not have adequate words to describe the situation. We expect a very sharp drop in the XAU to accompany a slight drop in gold, lasting until early June. McClellan Market Report