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The value of scenarios is not that they predict the market, but that they
provide a context for interpreting market action as it unfolds. Your
scenario is appropriate for this purpose.
Haven't done the statistical study, but I believe V bottoms are
significantly more prevalent than double bottoms.
One reservation is the projected cycle low for April (see DJIA cycle stuff,
3-1-01). Of course, this low could come in at a higher level.
My other reservation is: have the folks who move markets accumulated enough
inventory to sustain a 3-6 month advance? Perhaps they have: 19 Dow stocks
show moderate to significant accumulation, 2 are neutral and 9 show moderate
to significant distribution. This is a more positive accumulation profile
than I had anticipated.
With almost 2/3 of its components showing accumulation, the DJIA may be
primed for an advance.
Norman, now that the DJIA has convincingly violated its uptrend line from
the 94 low, do you anticipate a violation of the uptrend line from the 82
low? If so, do you expect the violation to occur this calendar year?
-----Original Message-----
From: Norman Winski [mailto:nwinski@xxxxxxxxxxxxxxx]
Sent: Tuesday, March 13, 2001 9:44 AM
To: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] [RT} DJIA: random thoughts
----- Original Message -----
From: "Stan Book" <sbook@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Tuesday, March 13, 2001 10:24 AM
Subject: [RT] [RT} DJIA: random thoughts
> 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.
Stan,
I think the scenario that pulls all of your above mentioned factors
together is a V bottom forming
in the next week, a 3-6 month big bear market rally that fools the public
into complancency, then, another long grinding bear market to new lows hat
ends with
"MOTLEY FOOLS FILE CHAPTER 7"
Cheers,
Norman
>
>
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