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Dear Howard and Gwenael,
I apply very simple "logic" to the current situation (of course, I could
site the long list of stock market authorities to support that approach,
but let me skip it).
1. Market (based on DJIA) made the bottom on Oct 18, 1999 at 9976.62.
2. It run up about 1100 points to the temporary top at 11,112.77 on Nov 22, 99.
3. In front of the market was a triple top resistance area: top May 13, 99
at 11130.67, top July 19, 99 at 11252.27, top August 24,99 at 11365.93.
4. What market could do? a) Stop at resistance area and turn down (making
it forth top), and b) go through the triple top resistance area. In that
case market is strong and the move will continue (subject to the so called
"bull trap").
5. One could adapt the following trading strategy:
a) enter the market (long) after October bottom,
b) exit the long position before the resistance area (let say about 11000)
c) if market go down reenter the long position after the sell off
d) if market go through the triple top resistance reenter (long) the
market for the rest of the rally
That approach has horrible shortcoming: if market blast through the
resistance level you will lose 300 point of the multi thousand point move
of the market. In my case it would be unforgiven - it would be the first
time since 1885 I will miss 300 point market move.
Logical Alex.
At 03:53 PM 12/22/99 -0500, Howard Hopkins wrote:
>RT's,
>
>Over the last several weeks it seems the consensus opinion of portfolio
>managers on CNBC is that y2k will be a non-event and Jan 3 one of the
>greatest investment opportunities in years because of all the "cash on the
>sidelines waiting out y2k problems". If they beleive this, then shouldn't
>they already be fully invested? What has driven the Nasd to these extremes
>if not professsional money?
>
>I beleive that the high level of bullishness, discounting of the y2k
>non-event, and the January Effect migration to Nov/Dec is a setup for a
>down January in the stock markets.
>
>Thoughts????
>
>Howard, the Contrarian
>
>
>>From: Gwenael Gautier <ggautier@xxxxxxxxxxx>
>>Date: Tue, 21 Dec 1999 18:09:04 +0100
>>
>>Hi all,
>>
>>What is your take here:
>>
>>With this raging bull going on, what would you do over the holidays?
>>Keep your long stocks or exit all and come back Jan 5th with a clean
>>plate?
>>
>>Gwenn
>>
>>
>>
>
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