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My work suggests that we have in fact made some kind of a bottom in both
the NYSE and NASDAQ. This is complemented by positive seasonals for the
equity markets. That said, I do not believe it is clear sailing and
return to the new paradigm of stock market riches. Trends in all of the
major indexes have suffered damage and some important intermediate term
trendlines have been broken. Many of the old leaders have been taken out
and shot suffering very significant technical damage in the process,
while the new leaders are unproven. The S&P TBill/EarningsYield ratio
has barely budged from historical extremes, in large measure due to flat
earnings accompanied by stubbornly high short term interest rates. The
NASDAQ itself is in a bear market which are generally marked by
extremely sharp rallies followed by grinding declines and I am not at
all convinced that we have seen the cyclical lows. VIX has not reached
the levels of fear which signal a major bull move. All-in-all, I will
trade as the market unfolds, however I expect to see a rally of limited
duration (2-4 weeks) followed by further sideways or downward action.
The NYSE is close enough to its all-time high that it could make
another, nominal new high. The SP500 and DJIA appear unlikely to make
new highs. The US dollar, which has gone parabolic, is wrecking havoc in
financial markets world-wide, and the eventual correction of those
excesses is likely to pose a major threat to US financial markets.
Earl
----- Original Message -----
From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Saturday, October 28, 2000 8:48 PM
Subject: [RT] Market - NASDAQ trend exhaustion
> Thanks to Earl and Ben for providing the Nasdaq new high and low data.
Sure
> does look like the low is in for the Nasdaq as its Trend Exhaustion
has
> formed the signature lower highs. The green TEI will start rising as
the
> new highs start increasing as a percentage of newhighs/advancing
issues
> increases. The TEI for the NYA looks similar.
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