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<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Timothy
Morge
<FONT
face=Verdana><FONT
face=Verdana>Why aren't there posts extolling the virtues of
selling every rally while we are in this beautiful downtrend? Where are
the charts that show tomorrow's potential sell area if we are lucky enough
to get a rally in price?
Perhaps if we all chanted that this is a downtrend, we will
end up getting a real rally.
But the weekly ADX chart on the Dow just turned up, so one
would believe that rallies are - still - to be sold with a trailing stop above
the most recent 3-4 week high, for those kind of traders.
May sound like a coincidence, but for much of RT's early
existence years (95-96 onwards) the bulk of list posts were aimed at picking
tops - and a few enterprising listmembers had created indicators to fade the
list based on frequency.
I, for one, am openly in awe of the destruction - and there is
still no bigwig losing jobs, getting fired, revolution, political intervention
or upheaval due to lack of intervention etc as typically happens in other bear
markets.
Re Ira's example of IBM - I may take issue here: Companies
like IBM and Citigroup were on the throes of bankruptcy then, so why is the
current case any different for these companies? I mean, it is "darkest before it
gets pitch black" too, no?There is, of course, difference between a
Lucent and a CSCO - a lucent is dying under the weight of its own debt, while
CSCO has no debt - so CSCO will survive. Maybe even grow if Juniper lets it grow
- or it finds some other market to grow in. The same could not have been
said of IBM or Citi way back when, since there were fundamental issues in both
cases that threatened their survival.
Still, when the chart looks the worst, is typically the best
time to buy. I couldn't have bought IBM at 40 on the rebound (would've been
stopped out) or Citi in the teens, but I'm no authority on these
things...
The days of 2001 are young, and the lessons to be learned by
us all are many, indeed.
Oh - by the way - the clock on the Magazine Bear Cover
Indicator has been ticking now for over 10% in the Naz, and getting there for
the other 2, NYSE, Value Line, Russell etc.
And don't ask for the drawdown to date for the "Don't Fight
The Fed" indicator either.
At some point, we will acknowledge that >10% down = not a
bottom indicator at all. Seems to me it is like that "American League wins Super
Bowl" indicator in terms of incidental correlation.
I mean, anybody can call it a bottom if they will give you a
10% variance. Right? When the long term average is 12% growth, what's a 10%
drawdown between friends....so what if the 10% drawdown shaved 83.3% of that
average annual gain, including dividend reinvestment.
Going back into shellsville now...
Gitanshu
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