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The symmetrical price action of the DJIA demonstrates a perfect balance
between risk averse investors fleeing the DOW for the safety of cash and
wounded speculators fleeing devastation elsewhere in the market for the
relative safety of the DOW. This is typical behavior at the end of an
extended inflationary spiral in equities.
Those Motley Fools have decreed that equities are the only rational long
term investment and that holding through bull and bear markets is the only
rational long term investment strategy. With this mentality prevalent among
the public, a bruising bear market would be required to reeducate them.
Between the present delicate balance and the end of confidence in equities
as an investment vehicle, we can anticipate extreme frustration for
perennial bears and false hope for buy-and-hold bulls.
A basing period of a month or so would allow for substantial accumulation
which could support a powerful counter trend advance. This would be my
preferred scenario over a V bottom and a weaker advance. Time will tell.
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