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Thur. 8-31-00[before the
opening]
Yesterday's opposite
action between Nasdaq and the SP500, had to do
-according to our floor trader- with J.P. Morgan
executing a spead trade in the futures market, on
behalf of a hedge fund, that involved the short sale
of 1400 SPU contracts, and the long buy of 400 NDU
contracts. How the markets behave today, is hard to
gauge. Any additional pressure on the SP500 could
easily bring it down to the 1480 level.
Wed. 8-30-00[before the opening]
It seems to us that
scenario #1 (see weekly updates) is unfolding. Unless
the economic reports due out the next few days, spook
investors, the market should continue to trend higher.
Tuesday 8-29-00[before the opening]
If you read our
"Weekly Market Report", you are familiar
with the two probability scenarios, regarding the
market's action this week, both forecasts that were
generated by our model (see charts, in weekly report)
predicted a rally on Monday. However, starting today,
the market should give us convincing evidence
supporting one of the two competing scenarios.
Friday 8-25-00[before the opening]
Our market indicators
gave a "sell" signal after yesterday's
close. That does not mean the market is going to start
a decline today -although it might- What it means is
that, over the next 1-5 trading days, a short -and
maybe intermediate- term top should be in place
Thur. 8-24-00[before the opening]
As we had predicted the
past three days, Nasdaq finaly made it over the 4000
level, with light volume, and very poor breadth. We
view any further gains -over the 4000 level- under the
same conditions of shrinking volume and poor breadth,
as a opportunity to sell and lock profits.
Wed. 8-23-00[before the opening]
Despite the seemingly
good news, yesterday, Nasdaq raced to the 4000 level
and then retreated again. We believe there is a good
chance the market might make another run for the 4000
level today. If it succeeds it will be a "bull
trap"
Tuesday 8-22-00[before the opening]
Yesterday, Nasdaq made
it to 3980 and then backed off. We expect more of the
same today. The market will probably open higher in
the morning, and then change its mind in the
afternoon. We do not expect Nasdaq to be able to hold
above 4000 (if it makes above 4000) for very long.
Monday 8-21-00[before the opening]
There is a high
probability that Nasdaq will make one more attempt
today to get over 4000. We do not believe that
Tuesday's FOMC meeting really has any impact on the
market at this point. It is a foregone conclusion that
the FED will not raise rates. The market has rallied
the past two weeks in anticipation of FED's inaction.
Thus, it is highly possible, that once the
expectations are fulfilled the market will sell off!
Friday 8-18-00[before the opening]
As we said yesterday,
both the SP500 and Nasdaq could stage a comeback. If
yesterday's rally continues while breadth improves,
then the outlook will turn from negative to positive.
As of yesterday's close momentum indicators were still
negative, that can change if the advance continues
today. Several stocks are looking promising such as
ORCL, QLGC, ADBE, GMST, NTAP, to name a few.
Thur. 8-17-00[before the opening]
The odds favor further
weakness today, and although both the SP500 and Nasdaq
could stage a come-back, momentum is turning negative.
Wed. 8-16-00[before the opening]
Yesterday, whatever
strength Nasdaq managed to gather, came from the SOX
stocks -which are rebounding from a deeply oversold
condition- Unless, there is more participation in the
coming days, Nasdaq will roll over again
Tuesday 8-15-00[before the opening]
As we pointed out in
this month's newsletter, the similarities between the
markets' behavior lately, and their behavior in March
are remarkable. We are amused to watch the Dow
rallying while oil is threatening to break thru $32.00
a barrel! Enjoy the party while it lasts.
Friday 8-11-00[before the opening]
It is never a bullish
sign -any way you try to spin it- when a market
responds negatively to a number of good news. We've
said several times that unless the rallies get broader
the markets (especially Nasdaq) will run into trouble.
At this point, we feel that even if the markets snap
back, the course of least resistance is down.
Thur. 8-10-00[before the opening]
Yesterday's action was
not all that encouraging, so, we would like to point
out a couple of things. For three consecutive days (Frid.,Mon.,Tues.)
the SP500 futures contract moved up, while the open
interest contracted, which means institutional traders
(who dominate the futures arena) were covering
short-positions, instead of, opening long ones. This
kind of action, is 70% of the time a bearish
indicator, going forward, for the very simple reason
that once short positions are covered, there is no
fuel left to power the market upwards. On the other
hand, Nasdaq has formed what is known in classical
chart analysis, as a "rising wedge" which
also 70% is a bearish formation. Of course, all that
can be negated in just one day, if the markets had a
1.5%-2.00% advance in accompanied with rising volume
and 2-to-1 positive breadth. Thus, we think today's
action could be rather crucial. If the markets open
higher and then they fade -like they did yesterday-
the short-term trend will become decisively beari sh.
By the same token, if the markets open lower and then
move higher with improving breadth and volume, the
short-term trend will be bullish. Our short term
forecasting model gives a 48.02% probability of
occurence of the bearish scenario, and 46.54%
probability of occurence of the bullish scenario, in
other words, it is neutral,we have no quantitative
basis to take either a bullish, or a bearish stand
ahead of today's opening, we got to let the market
show us which way it wants to go. By the way, Cisco's
ever ridiculous valuation implies that the company
will "own" the world within the next 5-10
years. The fact that market participants -after
thinking over Cisco's stellar earnings- treated the
stock with a ho-hum attitude, does that mean that now
"investors" are saying the "world is
not enough!!!"
Wed. 8-9-00[before the opening]
Yesterday Nasdaq looked
as if it was ready to roll-over. Then, after the
close, Cisco announced earnings that were greeted
enthusiastically in after-market trading, lifting many
internet infrastructure stocks. Therefore, there is a
good chance Nasdaq will rally today.
Tuesday 8-8-00[before the opening]
As we said in our weekly
report, our indicators are showing an upwards bias in
both the SP500 and the Nasdaq. However, the rally in
Nasdaq is very fragile, and in all likelihood it will
fail to take out the July high. If Nasdaq continues
its upwards advance today, these are the stocks to
watch: AETH,RMBS,JDSU,PMCS,VRSN.
Friday 8-4-00[before the opening]
Thru-out the week we
predicted that a reflex rally was imminent. Whether
yesterday's rally has the strength to carry forward,
or not, is yet to be proven. We went 50% long, but the
fact that on Wed. when Nasdaq fell 30 points declining
issues outnumbered advancing ones by 160, while
yesterday, with a 240 point rally (from low to high)
declining issues outnumbered advancing ones by 456, is
something that makes us very nervous about the market.
Nasdaq CAN'T go forward on the strength of 75 stocks,
we said that in July and the market fell 15%, we'll
say it again now, if rallies stay that narrow, there
is plenty of trouble for Nasdaq ahead.
Thur. 8-3-00[before the opening]
As we mentioned
yesterday, the oversold readings that our indicators
are showing (with regards to Nasdaq) are in the 91st
percentile(meaning only 9% of the time sell-offs in
the previous 5 years have exceeded the current
readings. Obviously, the market CAN go lower, but the
odds favor a reflex rally, starting any time
Wed. 8-2-00[before the opening]
If Nasdaq continues on
the downside for two more days, our indicators will
show an oversold condition in the 9% (meaning the past
five years only 9% of previous sell-offs have resulted
in a deeper overslod condition) Consequently, even if
Nasdaq continues its slide for a few more days, a
reflex rally is imminent.
Tuesday 8-1-00[before the opening]
Our short-term model
turned neutral(from bearish) yesterday morning. In all
likelihood, we're looking at a choppy market over the
next few days
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AEGEANCAPITAL
GROUP INC.