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The path of least resistance for the market may be sidways to up for awhile.
(Upside risk
appears to be greater than downside risk. (Ssee attached chart.)
Hust's concept is that prices tend to oscillate within a narrow envelope
(green lines) and that the narrow envelope tends to oscillate within a wider
envelope (red lines).
The present setup is frequently reliable. Price is tagging the lower edge of
the narrow envelope, while both price and narrow envelope are near the lower
edge of the wide envelope.
One trigger is a close above the lowest daily high of the
downtrend. An alternative trigger is a close above the steepest possible
downtrend line. The more conservatiave trigger is a close above the
extrapolated narrow envelope downtrend - this event verifies the envelope
has turned.
It may be instructive to look at the October, 2002 low which presented a
similar setup. In that case, the downward thrust of 4 year ('90, '94, '98)
and 20
year ('21, '42, '62, '82) cycles combined to drive prices beyond normal
envelope boundaries.
For what it is worth, my best guess is that over the present 20 year cycle,
prices will oscillate with significant volatility around a relatively flat
overall trend. For possible models, look at 1921-1942 as the 'extreme', and
1962-1982 as the 'normal.' The principle of alternation would argue for the
'21-'42 model.
-Stan
----- Original Message -----
From: "John Cappello" <jvc689@xxxxxxx>
To: "BobsKC" <bobskc@xxxxxxxxxxxx>; <realtraders@xxxxxxxxxxxxxxx>
Sent: Wednesday, January 22, 2003 8:12 PM
Subject: [RT] Tomorrow and after
> Dear Bob,
>
> Agreed about stops....At the same time, from people I deem reliable
> and not extremists plus my own observation, I think a new bull market
> has started. Just like all bull markets, it is not going to be
> straight up. It will be an up move and a correction.
>
> I have been monitoring earnings in the WSJ since the beginning of the
> year and close to 70% are increases in revenues and earnings. Even
> what was reported today on CNN was not all that bad.
>
> When Iraq is behind, I believe We Rock.
>
> Of course I am hedging a bit to be safe...
>
> John
>
>
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