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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
M.
Simms
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Monday, July 15, 2002 5:09 PM
Subject: RE: [RT] John Murphy notes: the
market isn't "cheap"
WARNING, WARNING....John is getting pretty old and so are
histechniques.....backtesting Head and Shoulders patterns shows no
better than a 50%prediction of significant, tradeablebottom or
top.
Bulkowski's book indicates
that the failure rate is only 7%.<FONT
face=Arial size=2>
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Many fantastic "reversal" rallies have emanated from the
neckline....GOTTA DO YOUR HOMEWORK, John....and less appearances
!> -----Original Message-----> From: Gary Funck
[mailto:gary@xxxxxxxxxxxx]> Sent: Sunday, July 14, 2002 8:02 PM>
To: Realtraders@xxxxxxxxxxx.
Com> Subject: [RT] John Murphy notes: the market isn't
"cheap">>>>> <A
href="http://www.murphymorris.com/affiliate/market_watch.html";>http://www.murphymorris.com/affiliate/market_watch.html>>
John Murphy's Market Watch>> by Mr. John Murphy, President of
MURPHYMORRIS.COM>> Sat, July 13, 2002 - HEAD AND SHOULDERS
TOP?> WHAT IS IT?... Quoting from the Glossary in my book
Technical> Analysis of the> Financial Markets: "A head and
shoulders top is the best known of> the reversal> patterns. At a
market top, three prominent peaks are formed with> the middle>
peak (or head) slightly higher than the other two peaks> (shoulders).
When the> trendline (neckline) connecting the two intervening troughs
is broken, the> pattern is complete." While most major averages show a
similar> pattern, we're> using the NYSE Composite Index for
illustration purposes because> we believe it> probably gives the
best overall measure of the state of the> "market". There's> no
question that the chart has the look of a "head and shoulders"> top.
The two> "shoulders" were formed during 1998 and 2002. The "head"
formed> during 2000.> The "neckline" is drawn under the
1998-2001 reaction lows. As of Friday's> close, the neckline is already
been pierced on the downside, but> not by much.> There are two
other support levels that bear watching. The first is the> intra-day
low hit last fall (which is at 494). The second (and> more
important)> is the late 1998 low at 463. Friday's close was only a
shade below last> September's low, but not by enough to call this a
clear breakdown> -- at least> not yet. Regarding the breaking of
the "neckline", there's also a> 3% rule which> comes into play
at major chart points. That means that the> neckline needs to
be> broken by at least 3% before we can call it a "major"
breakdown.> We may get> there (about 485), but we're not there
yet. Unless the market> attempts a rally> soon, however, a
breakdown could be imminent, which could carry the market> lower into
the September/October period.> [...]> THE MARKET ISN'T CHEAP...
The purpose of looking at the long-term> charts isn't> to scare
anyone. Our main goal is to show that this market isn't cheap. In>
fact, it's still historically very high. We've expressed the view>
several times> before that we believe the twenty-year bull cycle has
ended. That> means the> current bear market could last longer --
and fall much further --> than most> people realize. We don't
know how low it can go. It's the direction that> matters most -- not
the actual numbers. The "head and shoulders"> tops shown in> the
preceding charts is another warning that things could still get a lot>
worse. As the message is finally getting across to the public> that
this bear> market is indeed different from those in the recent past,
mutual fund> redemptions are starting. Imagine what could happen when
the> public finally> decides to start
selling.>>>>> To unsubscribe from this
group, send an email to:> <A
href="mailto:realtraders-unsubscribe@xxxxxxxxxxxxxxx";>realtraders-unsubscribe@xxxxxxxxxxxxxxx>>>>
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