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RT's
If you have been looking at the SP500/AD Line divergence, you may be
interested in this.
According to John Goddess (10-29-99):
-We do not know the length of the A/D divergence preceding the 1929 market
peak because the statistics go back only to 1927.
-When the A/D peaked in April 1956, 12 years before the market top in
December 1968, it was followed by a 6 year bear market in which the average
stock lost almost 75%.
-The A/D decline from its peak in April 1956 to July 1957 was followed by a
steep market fall, but not an extended bear market.
-A/D divergence preceding the market tops in January 1960 and December 1961
did not result in extended bear markets.
-There is no reason to believe the present A/D divergence (April 1998 to
October 1999) will break the back of the super cycle advance which began
December 1974.
-An advance to new highs is expected.
-A new SP500 high, accompanied by significant A/D AND Value Line divergence
would lead to a sharp decline, if not an extended bear market.
The A/D confirmation at the end of last week may suggest enough follow
through to favor position trades. Just my guess.
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