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Many of you expressed interest in the messages I receive from Tom. Here is
another. Isn't this a nice change from all the mechanical problems and
server problems and data problems? By the way for those of you have
questions, why not E mail him and mention I gave you his E mail
trader8@xxxxxxxxx
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>
>The expected scenario was followed
>exactly and we shorted the gap higher opening in the Dec. S&P's at 980
>(morning high was 981.70), covered and went long at 959 (morning low was
>958) and held through the day. [Trading the S&P involves some luck as well
>as homework on support and resistance.] The idea was that a follow-through
>from Thursday's turn would be met by early margin call selling, and then
>the rally could resume to the end of the session. Also, we thought that the
>time was ripe, (in this harvest season) for Washington officials to attempt
>optimism-building tactics, such as rumors of the Fed easing again soon,
>especially going into this weekend with banks and bonds being closed for
>business Monday.
>
>In the preceding week we had warned that the market was vulnerable again to
>a huge selling drive. This past week, the DJIA kept relatively level
>without a new low, while the more important S&P broke the Sept.1st low, and
>our Index led the way and continued down within its downtrend. The expected
>carnage took place mainly in the NASDAQ, where the index got back to a
>level not seen since May 1997. It lost
>23 % in just nine sessions before rebounding (and down 33% from July's
>top). That the market turned on Thursday after a certain couple of
>strategists belatedly lowered targets was just another example of the
>market moving opposite lately to the particular pronouncements of a certain
>lady. The Goldman Sachs expectations for S&P earnings seem excessively
>optimistic, and we think that John Manley will be closer to the mark. I had
>stuck my neck out five weeks ago, and maintained the posture that there was
>no chance of the Sept.1st lows holding, despite some vigorous debate with
>dissenting participants. I believe that my view has been thoroughly
>vindicated, since most portfolios held through this period have shown a
>marked decline in value, despite the illusion of the DJIA holding "firm".
>
>This coming week is noteworthy in that once again it is option expiry week,
>so short-term traders know what to do. Last week, the bears could not break
>the entire market partly because it was so oversold to begin with, and
>partly because there was excessive pessimism, especially as indicated by
>extreme readings on the put-call ratio. Monday should see some more
>unwinding of positions. Short squeeze, anyone? The action of the coming
>weeks depends a lot on what mutual funds do. Since many have fiscal year
>ends soon, whether they book sales of gains to offset losses now, or for
>the next year will impact the markets heavily. It may be that sales are
>pushed into November, increasing the risk in that month.
>
>About the next coming rate cut. It should come before the next FOMC
>meeting, and spark a short-term rally, but I still view this as temporary.
>I view the current rally as just a bear market rally, also, although I
>expect it to be strong enough to carry the market back to proven resistance
>at 8000-8200. It'll be tough for the S&P cash to get past 1015, but it
>would be a sweet short in the 1035-1070 area. This short-term rally will
>add consternation to surprise for those who just recently lowered their
>targets. That they are almost three months behind the analysts in gear with
>the market is pretty amusing. If only the rally could last long enough for
>Mr. A. to pronounce that we've seen the worst. That would present some
>opportunities!
>
>Our Sept.12th Foreign Capital Flows commentary is turning out as warned,
>with most strategists only now seeing the same consequences. The bonds
>suffered their worst hit ever this past week, just as the pitch to own them
>as "safe havens" became feverish. Bonds went parabolic just before their
>correction, the normal consequence of all parabolic moves. The US dollar
>got killed, temporarily. The Yen is now a safe short again.
>
>By the way, mention of high-profile pundits is intended to amuse, not
>offend. Everyone makes mistakes. I like to admit mine, and to see others
>admit theirs, too.
>
> P.S. Having not seen this anywhere else, let me be the first to remind
>everyone. Have you noticed that a certain coincident indicator, which NO
>rational investor would use for forecasting, is right again? I'm talking
>about the Super Bowl indicator, of course. How is Denver looking this
>season?
>
>
>
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