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Bruce wrote:
>Every bearish market technician and their brother has been in front of the
>cameras with a chart of the advance-decline line showing just how
"unhealthy" >this current situation is. Although big caps have certainly
been outpacing >small caps, the notion that this is a dangerous situation by
historical >comparison is completely false.
Actually the diverging pattern between the advance-decline line and the DJ
Industrial Index they were referring to, is a pattern that has preceeded
many sharp price selloffs in stock market history, all the way back to the
1920's. That's why it is referred to widely by market technicians when it
shows up.
It's not a myth at all. The market dropped over 800 DOW points. It is an
excellent technical indication of serious internal market deterioration. We
have an indicator that is based on this and price that we use. It was good
for detecting the impending market selloff and fired a signal on July 22,
1998 to exit the market, just prior to the several hundred point decline in
the Dow.
Michael Paauwe
mpaauwe@xxxxxxxxxx
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