Zeev's Ideas

[Koikaze]

ZEEV, NEAR TERM - up to ZEEV:327238, 11/28/04

11/23: (325890) (*COMMENT*)
Zeev, the monthly strength period is approaching, also. Some would say from say, Nov. 29th (next Monday) through following Thursday or so (Dec. 2) automatic money from 401k's and the like should be flowing in. If that's true, and we keep rising, would you still see a significant retrench (75 pts or so) following a rise into the first week of Dec.? Thanks.....
(*END*)

Could very well be, we had about 60 Naz points retrench, less than I thought we would have and really did not get much in term of even minor fear in the retrench, so it would be healthy to get something a little deeper, but we may just continue straight up. I have no clear indication if that was "the retrench" or not.


11/24: (326293) (*COMMENT*)
Good afternoon Zeev. Can you clear up a little of my confusion relative to the map?

Are you thinking we will begin a decline in to mid-December, beginning this Monday? I ask this because of the recent concern expressed regarding the MSFT situation. Does this change the turnips road map.
(*END*)

I had the decline till mid December, but the influx of funds from MSFT may stop that around the end of next week early the week after, difficult to say.


11/24: (326456) (*COMMENT*)
Early Dec. tax selling? Is that when you believe tax selling exerts its most force. My experience is limited but when I have watched issues closely with this in mind, seems like the lows are generally tagged in the 20's ( as in Dec. 21/26). Any education appreciated!
(*END*)

Typically, you are right, but with that big chunk of MSFT money sloshing around, it could be done earlier. Typically, tax selling (stocks that are down on the year) exerts influence for about two week starting with the second week in December (ajtj had a post on the statistics typical of December).


11/24: (326537) (*COMMENT*)

(Part 1)
I am thinking about this dividend thing. On the ex-div date, the stock was adjusted by the amount of the dividend to recognize that stockholders have something of value. However, if that money does not go back into the market, then the markets lose, don't they? In order for the market capitalization of the qqq and the SPY and DIA to stay the same, for instance, the dividend has to be funneled into QQQ, SPY, and DIA stocks. It seems to me that any movement of the dividend into anything else other than MSFT is a loss to MSFT and putting the money anywhere else than QQQ stocks is a loss to the QQQ.

This is not an opportunity to invest, it is an opportunity to re-invest. Anyone who chooses to reallocate their money to places other than MSFT and the indices that it is a big portion of is taking money out.

All of the major inices DIA, NDX, COMPQ, SPX are loaded with MSFT. REallocation by spending or moving the money to things other than similar stocks should be a loss to these indices, shouldn't it?

(Part 2)
The DIA divisor was adjusted, so no impact there, on capitalization weighed indices, yes, that 10% cut should have an impact, but I doubt it is even 1% sine with all its market cap, MSFT is not 10% of either the QQQ or the SPY.

(Part 3)
Yeah, I do not think it is a big impact. I am just saying that, if anything, it is net negative as money will flow out from the capitalization of MSFT and some of it will flow into other things. The net effect is small, but I just do not go with the "market awash with $30B" theory. Sell the news. THis is just like when Saddam stuck his crusty head out of the hole.

As afar as I can tell, no one is printing money here.
(*END*)

Steve, the point was made that typically, an average "inflow" of cash into the market is around $10 B per month (when it drops under $5 B or goes negative, we typically get down markets), a sudden injection of , in essence new cash, will act as a liquidity boost to the market, countering other possible seasonal weakening effects such as tax selling, bad economic reports and rise in crude and falling dollar. Will that overcome such possible influences? I don't know, but if the reports from this weekend shopping are glowing, these by themselves could counter a lot of the negatives out there, at least short term. My bet is still taking out 2275 before the middle of February.


11/25: (326608) (*COMMENT*)
I think that around here 2100 plus minus 20 is a good point for such a retreat

zeev, how low do you think we'll go?
(*END*)

On this run, not much, we are pressed for time and history is not a very good guide due to the unique liquidity bolus provided by MSFT' dividend. My wild guess is that we stop in the 2020/2040 area in the next two weeks.