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Bob -
As you know, I just go with what I see in the charts and what I think I
see in the market psychology. This time, MIGHT be different. While very
long term, I remain bullish, I honestly think there is enormous risk of
a bottom next week, at the end of the week, but at levels far lower than
you or most people think likely.
I am not a big fan of calling for crashes, but that is what I fear, at
least to the extent of something like October 1989, is possible. There
are a heck of a lot of people out there saying what you are saying -- 50
basis points is priced in. But, are they saying that 125 is priced in,
because that is what is priced in to year-end based on Fed fund futures?
I honestly see a significant risk of a dump to 2566 on the NASDAQ comp,
and even 1900 cannot be eliminated. Sub-9000 is not impossible on the
Dow and the S&P can go to 1050 or so. This is not a guarantee, and I
actually suspect the S&P stops around 1220, and then grinds lower for
another six months or so while bonds range trade between 7% and 5.75% or
so (US long bonds).
Remember, I thought the S&P would break 1500 at the start of the year,
but called for 5-8% down first at the end of December. I also thought
we'd get above 5000 NASDAQ, and we did. Now, I am not so sure. Please
see below what I sent to my clients on Thursday morning (I've NEVER sent
anything like this to them before and a move above 1460/1470 on S&P cash
would change that thinking, at least for the s-t, though I still think a
much more serious drop in the Dow and S&P, as well as the NASDAQ is
needed):
>From the GLOBAL MARKETS ANTICIPATOR, 11-May-2000:
· Losses appear to have gained a bit of speed in here. A bottom is not
in as yet. The bounce that developed in the last hour or so of trading
was largely frittered away into the close. We will need to watch the
activity very very closely here. A MOVE MUCH BELOW 1460/1455 MIGHT IMPLY
AN ACCELERATION TO LOWER STOCK PRICES.
· TO GET TO THE POINT, I WILL BECOME VERY CONCERNED THAT WE COULD HAVE
AT LEAST A MINI-CRASH AT SOME POINT WITHIN THE NEXT SEVEN TRADING DAYS
IF STOCKS CANNOT REBOUND QUICKLY. IN FACT, EVEN IF THEY DO, THE RISK IS
GREAT FOR THE S&P TO MAKE A RUN A BIT PAST OCTOBER'S LOWS BY MAY 19 OR
20. That would represent a bit more than a 20% fall from the highs set
in March. At that point, I will look for signs of a capitulation.
Failure to get that could mean a period of range trading and even a
grind to lower prices for the next 6-12 months.
· There are many cycle dates and day counts that suggest an energy point
in the week ahead. I have mentioned in the past the Parallax neural net
that has a major turn for May 19 (http://www.pfr.com). I spoke with Kris
Kaufman, who runs Parallax Financial Research yesterday for some time.
His expectation is for May 19 to be a low. If it is, it will be due to a
crash in my opinion. But, I also asked him if it was possible for May
19th to be an inflection point - a place where the trend accelerated
lower. He agreed that was possible too and he noted that the Dow has not
actually signaled a trend change yet by his way of measuring things, so
an acceleration lower for the S&P and NASDAQ could be coupled with a
sell in the Dow.
· Even if we do get a major turn on May 19, that does not necessarily
mean that the stock market will surge higher from that point forward. We
could largely range trade, and even grind a bit lower. The bottom line
is that the best case will be a 20% drop for the major indexes and a 40%
haircut for the NASDAQ from their highs. I continue to favor 1050 on the
S&P, 8500 on the Dow and 2566 on the NASDAQ.
· A trivia question. On March 23, 2000, what did the following 25
companies have in common? Ford, Texaco, Merrill Lynch, DuPont, Aetna,
International Paper, Sara Lee, Raytheon, Caterpillar, American Airlines,
Federal Express, McDonalds, 3M, Archer Daniels, Good Year, JP Morgan,
Anheuser Busch, Staples, Eli Lily, Fox Entertainment, Con Ed, Apple
Computers, Maytag, Hilton and Dow Jones? You give up? Their totaled
market cap almost exactly equaled that of Cisco. Except, Cisco had $15bn
in revenues and those stocks had $535bn in revenues. Cisco made $2.5bn
versus $36.5bn for the others. Makes ya think, huh?
· Immediate term actually does suggest that stocks should bottom and
rally into early next week. Look for a low in the S&P 500 in the
1380/1360 range (previously expected was 1380, when I was one of the few
s-t bears). Bonds, on the other hand, are stretching the up side and
should reverse lower. My only concern right now is that the likely
impetus to turn bonds lower, seems just as likely to turn stocks lower.
Of course, bonds did seem to rally on the weak stock market, so if we
can rally for a couple of days here, bonds might slide to new lows. But,
the only way stocks rally is if retail sales and PPI are as expected.
Better than expected should help both stocks and bonds.
· The dollar and foreign bonds have been moving largely as expected.
Cable is getting crushed in a capitulation process. The Euro could be
next. I suspect the dollar will get destroyed next week, with the US
stock market against the yen. I am not sure if the Euro capitulates now,
or then.
---
Steven W. Poser, President
Poser Global Market Strategies Inc.
url: http://www.poserglobal.com
email: swp@xxxxxxxxxxxxxxx
Tel: 201-995-0845
Fax: 201-995-0846
----- Original Message -----
From: BobsKC <bobskc@xxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Saturday, May 13, 2000 3:52 PM
Subject: [RT] Re: Bearish MA Crossovers in Nasdaq chart
> I will say one thing to this.. be very careful about shorting this
market.
> I don't care what charts or bones you're looking at, there is a *ton*
of
> money on the side lines and if interest rates get jacked up by 1/2
poimt,
> there will be less concern about the future of interest rates and that
hike
> is already factored in. Make no mistake, this market doesn't care
about
> over value, it cares about interest rates. It doesn't know why that's
all
> it cares about, it just does. There are no relevant historical events
to
> match these newbie investors in control of their own accounts and
gambling
> for today with a long time investment horizon of 2 weeks.
>
> Bob
>
>
>
> At 03:54 AM 5/13/00 PDT, you wrote:
> >NASDAQ composite si showing a number of bearish moving average
crossovers.
> >50 dma with both 89 dma and 100 dma. 34 dma is also penetrating the
200 dma
> >from above. This kind of situation normally suggests a good amount of
fall
> >though there could be a small rally initially in some cases. It looks
like
> >the earlier 3227 support would be violated in the next week or
thereafter.
> >Below that there would be support at 2900 and 2500 levels.
> >
> >Also, consider a fundamental information. From May 12 till about May
23,
> >about USD 500 billion worth of recent ipo stocks would be freed from
> >lock-in. while it is true that not all of it would come the market
> >immediately but a substantial part of it can definitely come exerting
a
> >fresh supply pressure on the tech stock market. some of the scrips
for which
> >lock-in shares would be released are still trading at much higher
levels
> >than their ipo prices.
> >
> >would list members be interested in discussing the above issues.
> >
> >thanks in advance
> >
> >rajat
> >
> >
>
>_______________________________________________________________________
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http://www.hotmail.com
> >
> >
> >
>
>
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