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In a message dated 6/21/00 11:51:09 AM Pacific Daylight Time,
bfulks@xxxxxxxxxxxx writes:
> I just think that if it works, it is
> because people think it will and make it self-fulfilling
Bob:
I understood that. I would offer that in extremely emotional markets,
like 1987 and the recent Nasdaq decline, that there are larger
forces at work. Having traded through the 1987 decline I can
tell you very few people bought that low because it was within
a few 10ths of a percent of a perfect 38.2% decline. Likewise, this
years decline in the NDX was an "almost perfect" 38.2%.
I do not think they were buying because it was a 38.2% decline,
but just "because." Indeed, many fibo gurus, and certainly the
masses, were oblivious to the "38.2%." I don't think it was a self
fulfilling in these cases (although I would not argue that it never is).
If anyone on the list bought the Nasdaq "because" it was at a 38.2%
retracement I'd like to hear about it. I'm curious how many on the list
even knew it was a 38.2% decline or cared.
I'm not into Gann at all, but I do find it fascinating that the 1987 DJI
crash and the 2000 NDX decline were so similar in "price and time."
Both declined 38.2% in just under two months. Statistically what are the
odds of two declines of such large magnitude being so similar?
Granted the 1987 decline was much more dramatic because it
did half its work on the last day, but the overall price-time patterns are
the same.
I guess my point here is that there are larger forces at play in the core
stock indexes (DJI 1987, NDX now), other than fundamentals,
or supply and demand. There is a rhythm that goes far beyond my
understanding, but it is there and it's fibo related. I'll agree that nobody
has it figured out, but I'll go back to studies that show the stock market
spends about
62% of its time going up and 38% going down. Some of those studies were
done pre Elliott in the 1930's.
Bill Wynne
TradeWynne@xxxxxxxxxxxxxxx
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