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I agree with your general assessment of the market condition. My work with very
long term log-scale charts indicates the market is accelerating and retracments
are becoming tighter. I believe we have entered a phase last seen during the
20's. It appears to me that the market is no longer rational, although throwing
money at the market is easily rationalized. As evidence we see: 1) every dip is
seen as a buying opportunity, 2) the public is increasingly in fear of not
capturing some of the great riches to be had, 3) the public sees market returns
which warrants application of high risk funds such as borrowing on credit cards,
home equity, etc. and 4) mutual fund managers are afraid to fall behind. The
market to a giant vacuum cleaner which is now sucking in all available
liquidity. Asia does not matter, corporate earnings don't matter, politics don't
matter, nothing matters except the monster itself. I expect the slope to
continue to accelerate and retracements to get ever smaller. Historians will
call the period The Roaring Nineties. When there is no liquidity left to feed
the monster, there will be one giant retracement. The only thing adroit traders
have to fear is a systemic failure (especially in the futures and options
industries) such that profits can not be redeemed.
Earl Adamy
Note for those not familiar with log scale: log scale charts display price
change in relative rather than absolute terms. A 20 point rise from DJ 100 shows
equal vertical distance to a 1000 point rise from DJ 5000. Thus, such charts as
especially well suited for long term historical charts.
-----Original Message-----
From: SP Broker1 <SPBroker1@xxxxxxx>
To: realtraders@xxxxxxxxxxxxxx <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, April 02, 1998 2:21 PM
Subject: Detail & Insight
>However, the point I was making is as follows. We are in such an OVERWHELMING
>up trend that someone trying to predict its end based upon
>whichever methodology they are using (be it Gann, Elliot, Astro, Classic Tech
>Patterns, bone throwing, etc) is almost doomed to failure before they start.
>The trend is UP. The trend will not turn down until it turns down. When will
>this happen?
>I DO NOT KNOW. Neither do any of you. But the best method to trade this market
>is simple trend following indicators and those indicators are pointing up.
>
>I believe that folks telling us the market will turn at such and such a price,
>WITHOUT telling us what type of methodology they are using, are doing this
>forum a disservice.
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