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Harley wrote....
"But first let me clarify a few things.
This is actually an analysis of the NYSE (with emphasice on 'exchange'):
1) New highs - new lows
2) Up/down vol ratio
3) Total volume.
(Neither of these are specific to the DJI, S&P500,etc.)
2 & 3 are the fuel that drive the exchange.
(Note: I said exchange & not market.)
Although the index that shows up on the .gif is the DJIA you could replace
the
S&P 500 or NYSE composite and get just about the same results as far as
seeing
corresponding time periods when the 3 indexes correct. In other words they
all
correct at about the same time, but correct by different amounts. So the 3
points above are very broad based.
The patterns (1, 2 & 3) that I am presenting are actually patterns for the
Exchange. When we get into the Index(s) and drawing a channel to determine
the
trend. This is the only analysis that becomes specific to the index."
Then why not use the NYSE Index which is an average of all stocks listed on
the Exchange?
Harley again wrote...."So where do I go from here? Taking your suggestions I
have no certainty that
the Russell has any correlation with the AIM funds. Unless it is a small cap
fund. Now the fund type helps me to identify an area of the market, but
doesn't
help completely. My current analysis (as it relates to mutual funds) tells me
the condition of the field(s) (NYSE, AMEX, NASDAQ), but tells me nothing
about
the teams( mutual funds, [securities]) that play on the field(s). Unless one
of
the funds is based upon a major index that also has data available."
I am not suggesting that you relate the Russell 2000 with the AIM Funds
Group. What I am suggesting is that along with your other indices you should
consider using the Russell 2000 so you will have small cap stocks included in
your study.
As far as using a mutual fund group, now that I do not think is a great idea
in and by itself. Generally speaking, each fund group has its own management
philosophy and/or approach. Some are growth oriented, some value oriented,
some large cap, some small, some use asset allocation, some balanced. So if
you use one group of funds, their investment philosophy dictates what you see
in your study. Now if that is your philosophy is the same as theirs, then
your use of that group is fine. Again, here I would prefer using general
mutual fund data....monthly total purchases and sales, the average mutual
fund industry cash position. What is the new money flowing into....stock or
bond funds, large cap or small cap. Is the new money coming from retirement
funds or savings. This I think will give a better feel as to what is going
on....much better than a single fund group.
Harley, I am not being critical, but am only voicing an opinion based on many
years of experience. But then again, it is only one man's opinion...........
Jerry
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