http://cnnfn.com/1999/10/15/news/marketinvestors/

NEW YORK (CNNfn) - Just five months after pushing the Dow Jones industrial average above the 11,000 barrier for the first time, investors have sounded a sudden and swift retreat that some analysts believe may be far from finished. Spooked by possible interest rate hikes, veiled warnings from Federal Reserve Chairman Alan Greenspan and new signs of inflation percolating in the economy, investors pushed the Dow down 266.90 points Friday to 10,019.71 That put the Dow 11.5 percent below its all-time high of 11,326.04, signaling an official market correction. The weekly loss of 660 points was the Dow's worst on record. Perhaps more importantly, the Dow dipped below -- albeit only briefly -- the psychologically important level of 10,000 points on Friday for the first time since April, portending, in the eyes of many analysts, even worse things to come. "The last vestiges of strength are starting to buckle under," said Rick Berry, director of equity research at J.P. Turner & Co. "I think this is just the beginning of something. "What scares me is the incredible amount of complacency in the market and the extreme over-weighting of Internet stocks. We still have a lot of unwinding to do, in my opinion." Buyers beware

-- Jack (mercer@usa.net), October 15, 1999

Answers

Say the DOW drops to 9000...so what??

That's a 15% correction, a BITR.

-- K. Stevens (kstevens@ It's ALL going away in January.com), October 15, 1999.

Yeah. Just a BITR (15%) UNLESS you're fully invested in the wrong things. Just like a local power outage for a week is a BITR to the big picture---unlessit's YOUR locality that's hit.

I fully expect the Dow to descend to the 7500 level over the next 6 weeks because the large companies are just now taking the earnings hits from lower sales and the write-off for y2k fixes.

-- Lobo (atthelair@yahoo.com), October 15, 1999.

K: You don't seem to understand psychology. The US stock market at its peak was valued at about $14 TRILLION . So, a 10% drop is a loss of $1.4T. You may argue that this is only on paper, that it will bounce back, but I say it will not, and it's all based on historical technical parameters that have shown that with those readings so bad, there is no hope of any comeback.We are looking at the tip of the snarling curl of the tidal wave.

The negative wealth effect alone could produce a dismal Christmas shopping season(actually, I know the US looks at the first day after THANKSGIVING as a harbinger of the season to come). So we will all know in about 5 weeks.

If I'm wrong, sue me.

I predict there will be a disastrous shopping season, with the only thing helping sales being Y2K items.

Besides, a major historical pin has fallen into place the past 3 days...CRASHES happen on/very near a Fibonacci 55 days after an all-time high in the DJIA.

Monday is day 55. Judgement day. The condition is that the markets show pronounced weakness for several days leading up to that day. I say that condition has been met.

-- profit_of_doom (doom@helltopay.ca), October 15, 1999.

Right now as we are reading and writing these opinions, the individuals that have been in the throws of frenzy over the last few years are beginning to contemplate something.

And what they are contemplating is how to take a negative paradigm and shift it back to a positive one.

And the answer they get is ----you cannot!! perception is everything in life.

They have been mentally and emotionally shaken by this because they know it will be impossible to get the train of euphoria stoked back up again next week or for that matter the rest of the year so its thoughts of "whats a trader to do"?

Where they put their money is going to be the next step!

-- David Butts (dcinc@aol.com), October 15, 1999.

Once in a Century, in the closing years of that century, the Infrastructure of the Planet is transformed. It is happening now. Accumulate the names in the new infrastructure...the Internet savvy companies, and old line outfits nimble enough to Get It.

Your grandchildren will be grateful!

-- K. Stevens (kstevens@ It's ALL going away in January.com), October 15, 1999.

Profit of Doom,

What is the Fibonici Scale? I never heard of it. Thanks!

-- (DowGuy@wallstreet.com), October 15, 1999.

"What scares me is the incredible amount of complacency in the market and the extreme over-weighting of Internet stocks."

This is the real issue, commplacency. When someone finally yells "fire", the stampede will begin. ww

-- wayne witcher (wwitcher@mvtel.net), October 15, 1999.

DowGuy,

Fibonacci was an Italian mathematician who, among other things introduced the West to Arabic Numerals. He also took a measuring stick and examined Nature and found that certain patterns pertain to Living Systems occur. Hence their application to the Stock Market, most especially price behaviour.

There are two forms of the series, the Periodic, which is determinative in the Stock Price sphere, and the Summary, which is used by savvy therapists to force change in clients. (There is NO defence!)

Too bad you squandered that opportunity to MAKE that girl take that job. A simple properly languaged sentence using the Summary Series (1,1,2,3,5,8,13,21,etc) would haved FORCED her to find a job. Her conscious mind would have been The Last To Know.

The Periodic Series involves repeated, harmonic applications of 3 and 5 which evolve into patterns of price behaviour. See the Elliot Wave for details.

-- K. Stevens (kstevens@ It's ALL going away in January.com), October 15, 1999.

So it goes to 9000,8000,7000, etc., where will you put your money? I think I'd just have to leave what I've got in the market there. I know Social Security won't be there in it's present form in 30 years so what to do? This is why the big crash probably won't happen in our lifetime. There's only so many places in the world to put your money. If everyone pulls out and puts there money in a mattress your really no better off are you? Don't believe in Beatles(Greenspan, et al. believe in you.

-- (roark@not.now), October 15, 1999.

Fibonacci Levels are AMAZING! Most people use them in terms of Retracements, but using the Expansions is the key. I do agree that Major Retracement Levels are important, they just occur to infrequently for my trading style.

I think most software packages include the ablility to draw them, but you can do it by hand. Simple take the high to low distance, and multiply it by the Fibonacci percentages (i.e. .382, .5, .618, 1.618, 2.618, and 4.236) and you will see where the price will at least stop, if not turn around. I'll admit there is a trick to employing the various time frames (daily, weekly, intra-day, etc.), but using Elliot wave for timing, or Delta, you can put it all together and find a trade to suit you.

-- Gregg (g.abbott@starting-point.com), October 16, 1999.