|
PureBytes Links
Trading Reference Links
|
Ralph,
I suspect it may have been my 101 year INDU
chart (or Earl Adamy's S&P chart from 1928 forward) which caught your
attention.
Without meaning to speak for Earl, I offer the
following response to your comments.
First, the century-long support line on my INDU
chart is anchored on only two points. Accordingly, although the distance between
any two points is by definition a line, the century-long support line is without
the confirmation which would be provided by one or more retracements to and
rebounds from the line. Even so, the line which I have drawn is steepest support
line which holds all the data from the 20th. and 21st.
Centuries on a semi-log or arithmetic chart of the price data.
Second, the decline in the NASDAQ has been
astounding (from the high of 5133 to the April low of 1620 = 68.4%) and of the
order of magnitude which you attribute to the crash which commenced in
1929.
Third, since INDU put in the high of 11750 on
January 17, 2000, it has been in a downward trend channel (the lines of which
were parallel until May 2001, when as an apparent result of Greenspan's rate cut
of April, INDU briefly penetrated the upper resistance trend line - now the
maximum and minimum trend lines of the channel are a downward widening
formation). As well, INDU broke through its 6 + year support trend line in
September, 2000 (a line which was confirmed numerous times), and having been
within about 770 points of the upper bounds of its 20 year trend channel, now
appears headed to test the lower bounds of the 20 year trend channel - although
if INDU remains within the 21 month old trend channel it will not test the 20
year support trend line until late November, 2001 at the earliest (at or above
8720).
Fourth, on an intra-day basis INDU briefly
entered bear market territory on March 22, 2001 (22.49% decline from January 17,
2000). The commentators at CNBC and elsewhere focussed on the closing
percentages and on the fact that INDU did not decline further, however, if my
chart is accurate it should not have done so in any event since that intra-day
low coincided with the extension of the lower descending facet of the large
diamond formation which INDU had been in from April/May, 1999 (which diamond
formation was broken on the downside in September, 2000 or March, 2001 depending
upon which lower ascending facet one chooses).
Fifth, the malaise currently affecting the US
equity markets is not confined to America. My chart of the Hang Seng shows a
penetration of the best (two point) support trend line from 1984 to the present
in September, 2001 (actually on September 7, 2001, on a gap down). An
alternative support trend line from 1989 to the present now sits at around 9700+
at a confluence of the 21 month bear support trend line and a 68.2% retracement
of the move from 1983.
As well FTSE 100 is down through the 18 year
trend line on data available to me and TSE 300 is relatively close to its 20
year support trend line (charts to follow.)
Sixth, I agree that inflation adjusted charts
would be insightful. I do not agree that semi-log is inappropriate - and I
regard Edwards & Magee and Murphy as authorities of the same view. If the
argument is that the world in 1929 was apples and the world in 2001 is oranges,
beyond issues of inflation adjustment, that is true but all that I know of
cycles and waves is that we are bound to repeat the errors of our ancestors,
perhaps in ways they could not have imagined.
Seventh, as I noted above and in my earlier
email, INDU has yet to penetrate its 20 year support trend line. Nevertheless,
as my 101 year chart of INDU illustrates, since the peak of 1929, INDU has spent
alternating periods of 15 +/- years in corrections and 20 +/- years in
expansion. The chart is intended to illustrate, based upon available data, the
possible outcome of a 15 +/- year period of contraction commencing in 2000.
Eighth, the unanswered question in my mind is
not whether we will visit the 20 year support trend lines in the major markets
around the world, but whether we will hold there. It befits INDU as the
depository of the wealth of the wealthiest to display its relative strength.
Somewhere in the texts of technical analysis, however, is the observation that
in a bear market the strongest companies are the last to fall.
No one knows whether INDU will revisit the 100
year support trend line. My guess is that if INDU breaks down through the 20
support trend line, it is quite possible that it will slide up the underbelly of
that line until it reaches the shorter term resistance line, and then go
searching for support at a lower level. As someone else has written at
RealTraders, the mid-point line between the 101 year support and resistance
trend lines may be a reasonable next target in that scenario.
Finally, I too have noticed the increase in
bearish sentiment at RealTraders as of late. I have generally found the
prognostications offered by the senior members of RealTraders to be cogent and
insightful, and while I believe INDU may rest for a moment now or shortly and
eventually stage a Christmas rally, I am not inclined to regard their
bearishness as being a useful contrarian indicator.
As I am not in the trade, let alone licensed to
offer advice for, all of the foregoing is merely FWIW.
Regards,
Tony Pylypuk
<BLOCKQUOTE
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Ralph Volpe
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: September 9, 2001 4:15 PM
Subject: Re: [RT] 1929 Comparisons
A chart was
recently disseminated that was supposed to show the similaritiesof the
1929 crash to the market today. Let me comment on that very briefly --it's
bunk!The collapse today has so far been a token crash that's primarily
affectingthe tech stocks. Let me point out that the Dow has only lost 17
percent innearly 21 months (and that's a good Fib. relationship).
Investors in 1929would have been ecstatic with that type of decline. As
well, the S&P500 haslost 25 percent in the same time period. If you
compare years 2000/2001against 1929 you'll see that there's a world of a
difference in pricedeterioration.Also, you're drawing trend lines
on a semi-logarithmic scale and I don't knowif that's an accurate way to
arrive at comparisons. For example, Back in 1929the S&P lost 50% in a
month after the '29 top and up to 60% only a few monthslater. The flaw in
such comparisons is simple: you can't compare apples tooranges -- all
things considered, it's impossible to draw comparisons. Forexample, the
universe of traders and trading vehicles are totally different,commodity
prices may be totally different, and the government has moreaccurate data
to proactively involve themselves at an earlier stage. On afinal note,
even though the scale in the gif were semi-logarithmic therewasn't any
adjustment in price to account for inflation --- and that makes aworld of
a difference. And, although I'm into celestial influences, are theythe
same? Let's ask those who follow this discipline.On a note I'm happy
there's so much negativity in RT. Why? I see a nicecounter wave here that
I think will carry for several weeks. I'm basing thison an Elliot pattern
and some Fib relationships that may hold. So, with allthis negativity, it
may be a great contrarian investment.RalphTo
unsubscribe from this group, send an email
to:realtraders-unsubscribe@xxxxxxxxxxxxxxxYour
use of Yahoo! Groups is subject to the <A
href="http://docs.yahoo.com/info/terms/";>Yahoo! Terms of Service.
Yahoo! Groups Sponsor
<font
face=arial
size=-2>ADVERTISEMENT
You can, too! Start here...Height: 3
4
5
6
7
8
ft
0
1
2
3
4
5
6
7
8
9
10
11
in
Weight:
lbs.
kg.
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxxxxxx
Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service.
|