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   Strategies & Market TrendsMARKET INDEX TECHNICAL ANALYSIS - MITA


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To: fut_trade who wrote (2333)1/14/2000 3:20:00 PM
From: J.T.
   of 19216
 
Peter, thanks for your forthrightness. If I may persist:

What were the biggest factors or indicators that helped you form your decision to go short?

Best Regards, J.T.

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To: J.T. who wrote (2334)1/14/2000 3:25:00 PM
From: fut_trade
   of 19216
 
...your decision to go short?

Don't put too much emphasis on my decision. I'm a trader and will abandon my short position if it goes against me. The breadth is still ok, although as you say, it's a lagging indicator. Markets don't crash from their highs, but they can drop a bit.

There is no economic news next week, and we have an interest rate hike coming up, so I think that's a negative.

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To: fut_trade who wrote (2335)1/14/2000 9:14:00 PM
From: TWICK
   of 19216
 
Thoughts on this week and next from Briefing.com:

Weekly Wrap: You know, if you take Tuesday January 4 out of the picture, the market looks like it has been in a continual upward straight line since October 15. The past week, with only some minor bumps, is still on an upward trend, with technology leading the way. No matter what you think about valuation levels, or the level of speculation, bubbles, or the number of stocks that haven't risen, you have to admit that this market has incredible resilience. Even rumors of the possible breakup of the nation's largest company, and the announcement that Bill Gates is giving up the wheel, doesn't wreck the market. Interest rates continue to rise, and Alan Greenspan starts shaking the stick a little bit, but the equity markets just don't quit. Did you see any articles in the business media stating that the markets are worried about higher rates in the past week? They were obviously wrong. Rates continue to steadily rise, no one cares. If the market itself where a single stock, it's relative strength (compared to the investing environment) would be incredible! Relative strength measures a stock's performance against the market, and stocks which are unfazed by market declines have strong "relative strength." The market indexes, and many major technology stocks are showing that kind of strength. Frankly, the market's resilience can be viewed positively, even as many scratch their heads and say "It was crazy two years ago, now it is insane!"

Weekly Returns Symbol Close Weekly Change Percent Change
Dow Industrials (INDU) 11,722.98 200.42 1.7%
S&P 500 (INX) 1,465.16 23.69 1.6%
Nasdaq (COMPX) 4,064.34 181.73 4.7%
30-Year Treasury Yield NA 6.69 % 0.15 (15 basis points) NM

In this paragraph, we usually look at economic releases coming in the next week, with possible implications. Next week is particularly light, with only housing starts having much significance. But even that won't be looked at too closely by the markets. Maybe Microsoft's recent push into the "wired" home might make tech investors start watching housing starts, but for now, it just won't have much impact. It might actually be nice to get an economic report with clear bad implications for economic strength, because that would test the market resilience's. It is pretty amazing that higher interest rates are being ignored. Would signs of higher inflation be ignored? Would signs of an economic slowdown be ignored? In this real world laboratory, it might be interesting to test that, but the economy keeps on growing, and inflation keeps its head down. In any case, next week certainly won't test any of this ideas, which can only lead to one conclusion: the market will continue to rise. After all, it has, in a straight line (if you take out Tuesday January 4), for 13 straight weeks, a full quarter. And in that time the Nasdaq has risen 49%. This keeps up much longer, and even Briefing.com is going to start believing that "Hey, stock prices always go up." - RVG

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To: fut_trade who wrote (2335)1/14/2000 11:09:00 PM
From: Dwight E. Karlsen
   of 19216
 
Peter, MSFT reports Tuesday, Jan. 18th, after the close. I would expect the major indices to be strong until then, since MSFT is expected to produce very strong earnings. INTC was also expected to produce strong earnings, and the street was still surprised.

Keep in mind, Intel sold down their inventory to record lows, and "wished they had more to sell, so to satisfy every customer's needs": One Intel processor = One Microsoft OS, and usually one MS application suite as well. No way would I be short going into MSFT earnings, just as I wouldn't be short going into INTC earnings (at least in a hot PC sales environment such as we're in).

Regards,

DK

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To: TWICK who wrote (2336)1/14/2000 11:14:00 PM
From: Geoff Altman
   of 19216
 
Nice post. You summed up what 90% of investors are probably thinking as far as the economy goes.

About the possible break up of MSFT though, everyone thought it was going to be a real debacle when they broke up ATT too, but the splinters of the company did well as separate entities.

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To: Dwight E. Karlsen who wrote (2337)1/15/2000 9:56:00 AM
From: fut_trade
   of 19216
 
I'm not short INTC and I'm not short MSFT. There are good short candidates are year long. It's just a difference in trading styles. Do you know what prompted the '87 crash? -- rising long bond yields.

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To: fut_trade who wrote (2339)1/15/2000 11:14:00 AM
From: marginmike
   of 19216
 
To 10% and by the end of the year if you ignored the crash you would have been ahead of where youve been What is your point?

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To: fut_trade who wrote (2339)1/15/2000 11:49:00 AM
From: TWICK
   of 19216
 
Don't mean to down play the 87 crash, but in the big picture, to me at least, when I compare the effects and aftermath of the 1929 crash, it's but a scratch.

Twick

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To: marginmike who wrote (2340)1/15/2000 11:54:00 AM
From: fut_trade
   of 19216
 
I could ask you the same question -- what is your point?

I'm a trader and I don't want to hold a long position in a decline.

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To: TWICK who wrote (2341)1/15/2000 11:56:00 AM
From: fut_trade
   of 19216
 
I'm a trader, not a long term holder.

If one can make money by being short for a limited duration, that's what counts.

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