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My work is suggesting that we are entering a new era ... it's called
systemic risk. Bottom line is that time/price expansions are accelerating to
the downside with many indexes reaching the extremely rare 425% ratio. The
Ru2000 and Sp400 were the first to reach these levels, however the other
major indexes are now catching up with the NYSE well beyond the 262% level
which is generally considered extreme. Virtually all critical support levels
under 900 in the S&P 500, have failed to hold (most breaking within hours of
being reached) with price now approaching the critical 750 level. The stock
market is telling us that it sees far more than a simple realignment of
stock valuations.
The banks are always involved in an systemic crisis and the fact that the
major banks (especially JPM with tens of trillions in derivatives on the
books) are now under attack should not go unnoticed. So too are corporate
bonds ... this as credit problems in the lower tranches of CBO's infect the
higher rated upper tranches. Given the total size of debt and derivative
positions, it is unlikely that the Fed and Treasury can intervene to the
degree which would be required to halt a systemic meltdown, although they
will likely attempt to slow it.
Bottom line is that bottom fishing is now an extreme "sport" ... do not
believe what you hear and see on the media.
Earl
----- Original Message -----
From: "BobR" <bobrabcd@xxxxxxxxxxxxx>
To: <MedianLine@xxxxxxxxxxxxxxx>; <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, July 24, 2002 4:58 AM
Subject: [RT] GEN - change of pace
> Years ago there was an article in Stocks and Commodities magazine titled
> "TEI" or "Trend Exhaustion". It is a ratio of new lows divided by
declining
> issues. The fingerprint of a low is when the ratio makes a peak, backs
off
> and then makes a lower peak. It seems to work better on price bottoms
than
> on tops. The attached chart shows the current state of affairs.
>
> enjoy,
> bobr
>
>
>
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>
>
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>
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