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I think these theories would work well in a core bull trend of
a higher term timeframe. I think that in a core bear trend, the cover indicators
are useless. Nobody publishes research of bear covers during the 60's-70's and
the 30's though the average investor was equally devastated.
One major clue for the bear ending that is currently lacking
is the drying up of volume for an extended period of time. I'm sure there's a
major grammatical error in that statement, but hopefully the point comes across
that volume has not dried up.
Nothing in the bullish camp sets up just underneath the highs,
making for powerful breakout moves to the upside should the general market
rally. Wherefore will the fuel for a new uptrend come from?
Another major clue for the bear ending that is currently
present (unlike the above) is the drying up of consolidation-breakdown patterns,
which indicates that the market action going forward is likely to be more random
and less orderly, making both bull and bear happy.
Of course, I have opinions, but I trade
charts.
And while on charts, I've found it easier to trade trends, and
in the Nasdaq. the Dow and the S&P at least, there is no doubt where
the trend is, Down.
In theory, of course, if trends were to continue, stock prices
would logically go to zero.
Thus - I'm obviously going to be wrong somewhere.
How's that for a total hedge... on a boring day for trend
followers when the Dow makes a lower low, the SPX makes a lower low but looks
like a reversal bar if time were to freeze right here, and the NDX is having an
inside day.
Gitanshu
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