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You could be right on the long term trend, but April, US income tax month, is
historically an up month. Then what about the summer rally. I am not pooh poohing
your analysis, I am only posing a timing question. The other question, will we have
another 1987 or a protracted 1974? Each case qualifies for a different strategy. Don't
worry about the future holds, plan how to deal with it when it arrives. Have a good
week, Ira
"U.Stuart Auslander, NYC" wrote:
> Sol
>
> My prediction for continuation of the "bear market" does not rule out the DOW
> from hitting 12,000. I am arguing only for longer term investors that the
> technical signals are flashing very serious warning signs of a significant top &
> that April constitutes the top for the broad market. The advance decline line is
> now divergent for 10 months since the top in April 1998. (Since 1955 there have
> been 15 tops or top signals signals. Two were false,1964 & 1988. 1968, 1983, and
> 1993 there were no divergent signals.) (See http://www.decisionpoint.com for
> charts from 1926.) Divergences longer than the current 10 months occurred in
> 1973 for 19 months and in 1987 16 months. I would describe the current
> divergence as catastrophic.
>
> My doubts to the accuracy of my prediction do not relate to the broad market but
> to the DOW which represents the most heavily capitalized issues. These are
> virtually always the last to start declining in the "bear." Better timing methods
> come with Fed tightening, rising interest rates and escalating inflation. We may
> see none of this in this bear market. I suspect we will get the bear with Fed
> stimulation, declining interest rates and declining rates of inflation. Earl
> Adamy from the Realtraders List has cited extreems of specialist short selling.
> (Does anyone have a free source for charts on this?) This confirms the extreems
> of call buying and observation of extreems of speculation in internet stocks. The
> kind of speculation we see now I associate with the 1969 rally after the 1968 top
> and the 1962 speculation. In each case serious declines followed. 1962 was not
> associated with conventional Fed tightening though interest rates did rise.
>
> BerniceSol@xxxxxxx wrote:
>
> > Dear Stuart,
> >
> > Perhaps the very fact that the Dow and the A/D are divergent proves that there
> > is not one "market" but at least two, and that the conventional measures don't
> > apply.
> >
> > Sol
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