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Mention has recently been made of The Titanic Syndrome, originated by
the late Bill Ohama, and updated by Dennis Meyers. Some of you may also
be interested to know that further research on the subject was done by
Nelson Freeburg, editor of Formula Research. His work was published in
the April 7, 1992 issue of that newsletter. He found that there were
many flaws, inconsistencies, contradictions and false signals in Ohama's
writings and methods. However, he was able to come up with an effective
indicator of market declines based on the Titanic Syndrome. Without
giving away the formula, I will say that he combined some of the
original conditions along with a specific change in one interest rate.
Quoting, "When this serviceable tool was used to filter the Titanic
Syndrome, the results were wholly transformed. Testing going back to
1965 showed a total of fourteen sell signals. Each was followed by an
unmistakable market decline. The deepest pullback was 41%, the mildest
1.8%. The average downtrend captured by the method was 14.1%. Total
downside gains counted from the date each signal was issued to the
subsequent low in the Dow came to 2945 points, a healthy 210 DJIA points
per signal."
Signal Dates: 5/21/65, 12/28/65, 4/7/72, 8/14/72, 11/3/72,
2/12/80, 11/13/80, 5/4/81, 10/19/83, 4/10/87, 9/2/87, 10/18/88,
2/13/89, 5/14/90.
Non-subscribers can purchase back issues at a slightly higher price than
subscribers. Around Thanksgiving, Mr. Freeburg announced a sale lasting
until year-end. I do not remember the specific prices, but $25 to $35
for each back issue is close. Mr. Freeburg advertises in Technical
Analysis of Stocks and Commodities. His address is 4745 Poplar Ave.,
Suite 307, Memphis TN 38117-4408. Phone number is (800)-720-1080. Mr.
Freeburg himself may answer the phone; I have spoken to him at length
on several occasions. He has been interviewed in TASC and Omega
Research's quarterly publication. I am a subscriber only. I have no
connection to Mr. Freeburg other than that. If you are interested in the
Titanic Syndrome, give him a call.
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6EQUJ5
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