15,000 Dow

indahook · Dec 13, 2003

I don`t think anyone mentioned all of the cash sitting on the sidelines. When investors gets there next statement and see the returns that will fuel another leg up into at least second half 04. I am not saying that we wont have a correction. But I have a slight Bullish bias right now. To strong to plummet and much to weak for 15k, IMO.

Hook.

pspr · Dec 13, 2003

Quote from indahook:

I don`t think anyone mentioned all of the cash sitting on the sidelines. When investors gets there next statement and see the returns that will fuel another leg up into at least second half 04. I am not saying that we wont have a correction. But I have a slight Bullish bias right now. To strong to plummet and much to weak for 15k, IMO.

Hook.

I've never quite understood the "cash sitting on the sidelines" theory. Every time someone buys stocks the cash just moves from the buyer to the seller and now the cash is on the sidelines with the seller. The amount of "cash on the sidelines" never changes!

I do understand that one can identify the amount of cash a certain group has "on the sidelines" such as "cash held by mutual funds" or "cash in 401k's". But just to say there is a lot of cash on the sidelines doesn't make any sense to me.

And, I understand that buyers (with cash) may start buying another instrument such as bonds but the seller of the bonds still has that cash available regardless if he decides to use it for stocks or other bonds or something else.

If someone has an explanation, please enlighten me.

Lawrence Chan · Dec 13, 2003

There are 2 types of cash considered as sideline,

1. Cash reserved by trust funds, mutual funds, etc.

2. The complete amount of money mkt funds.

For the 1st one, they are at the all time low level in terms of percentage, possibly due to the fund mgrs averaging all the way down from year 2000 til now and the prices are still below their average cost, say, on stocks like CSCO

For the 2nd one, which is quoted as cash that will switch to other fund types like bond, index, foreign, etc. is the one that has been accumulating for a while. This type of money is earning short term interest only.

So, indeed, when such money are switched to say stock mkt related funds - like those index funds, they do have the power to drive the mkt higher.

The key question is whether these money were suppose to be the cash saving that used to go into saving accounts and/or checking accounts, but due to the cost of maintaining accounts with banks is so high, has driven the public to put their regular cash reserve in money mkt fund instead. After all, the money mkt funds now have all the benefit of writing cheques, ATM banking, etc.

oten · Dec 13, 2003

I don't have an opinion on reaching 15K, but as a daytrader I'd love to see it.

As the number rises, the intraday moves will normally likewise expand as even if the percentage move remains the same.

The greater the moves the higher my percentage of winning trade.

So I am all for a higher market across the board

Good luck!!

illiquid · Dec 13, 2003

On the first real break of the 50-day MA, do you guys think more bulls will buy or sell?

indahook · Dec 13, 2003

Quote from Lawrence Chan:

For the 2nd one, which is quoted as cash that will switch to other fund types like bond, index, foreign, etc. is the one that has been accumulating for a while. This type of money is earning short term interest only.

So, indeed, when such money are switched to say stock mkt related funds - like those index funds, they do have the power to drive the mkt higher.

That is precisely what I meant. Thank you for elaborating on my thought Mr. Chan.

Chris.

riskarb · Dec 13, 2003

Quote from oten:

I don't have an opinion on reaching 15K, but as a daytrader I'd love to see it.

As the number rises, the intraday moves will normally likewise expand as even if the percentage move remains the same.

The greater the moves the higher my percentage of winning trade.

So I am all for a higher market across the board

Good luck!!

The wonders of Geometric Brownian Motion -- would love to see it as well.

arb.

TheCaracal · Dec 13, 2003

Quote from riskarb:

The wonders of Geometric Brownian Motion -- would love to see it as well.

arb.

I could certainly enjoy those 19 point ranges again ..like GLW in 2000...that one stock made my whole year!

Best,
David

electron · Dec 13, 2003

Quote from Lawrence Chan:

This is a very long term chart.

The bottom pane is 52 Week Average of Weekly Range in Pct.

Notice that we just have one of the longest drop in weekly range in recent years.

Will we go back to the old days of 2% top a week?

Thanks for this picture. Could you post something like that for NDX and SPX? That would be cool.

Now, as we see from this picture the decline in Weekly Range is associated with rising markets. I believe we will keep dropping till 3% or so and then we will rebound moving beyond 12,000. I predict 12,000 by the end of 2005, but that's just a pure speculation.

OTOH, I believe, based on more reliable indicators, that next week will bring a swift move past 10,000. In other words, I am expecting a strong Christmas rally that will take us to 10,200 or so by January 1st, 2004. 10,000 is going to be a major support soon.

ARogueTrader · Dec 14, 2003

Quote from marketsurfer:

as you know, i am not trading untill the first of the year--- however, i would be very cautious going long at this time.

You would have been wrong with your cautious predictions......shame you quit trading, the "system" would have been long!