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Sentiment readings which work in a bull market are frequently not reliable in a
bear market so I would be cautious about using them. The H&S bottom in the McOsc
completed on 8/12, failed on 8/26, the oscillator has not turned up, and at such
deeply negative levels the McOsc is unreliable without smoothing using a short
term average - the 5ma of the McOsc is still headed down but a bottom here would
confirm a rally. The McOsc based on weekly a/d remains headed straight south to
bear market levels.
I do generally agree with your conclusions. Am looking for a drop to the (NYSE)
485 area followed by a sharp rally in both big caps and interest rates, followed
by another decline to the 480-485 area which may hold.
On the longer term I suspect we may well see a trading range market not much
above DJIA 7000 for the
next couple of years (through the millennium) accompanied by long yields in the
4% area followed by a resumption of the bull market. The yield curve has been
saying recession ahead for many months and the earnings yield/tbill model has
turned down indicating a probable return to historical norms: about half of
current levels in some combination of reduced rates and reduced stock prices.
The rapidly increasing downside risk here is that if the global
financial/political problems are not contained, we could see a horrific bear
market decline. In any event, if we get a decent rally here, will be looking to
load in more zeros.
Earl
-----Original Message-----
From: Proffittak@xxxxxxx <Proffittak@xxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Monday, August 31, 1998 5:10 AM
Subject: mkt outlook
>good morning
>
>with only 19% of all stocks on big board above their 200 day m/a
>we are exterimely oversold
>
>mkt sentiment has not turned up
>McClullen osc at -216 is definetely at much HIGHER reading then last sell
>off
>with MUCH lower prices(bullish divergence)
>i suspect intra day low of 490 on nya and then a dead cat bounce to
>555-560nya intra day hi
>unless new hi-new low/total issues*100 goes above its 19 day expo/ma
>i will NOT go long this mkt but re short@ 555-560nya
>fundamently the mkt is at its best reading in 2.5 years (projected earning
>growth based on cost of production labor and material ,shipping and
>marketting)
>but we must visit 450-475 nya before the new rally starts for real
>
>happy trading
>Ben
>p.s
>for the week sep sp low@xxxx and hi@xxxxxxxxx
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