Jeff, an very interesting set of observation. But since you like to "keep an eye on the big picture", I think we should ask ourselves an "immediate big picture" question, will the coming desertion of investors signal the last bottom of this bear move or have we entered two three years ago a period like the 1966/82 period where the big indices are going nowhere fast? If you believe that an immediate bottom , a real one, is at hand, yes, the last stage of such bear moves are often quite devastating (I thought that what we saw in the 9/216 to 9/28 week), but if we are in a lengthy period where valuation metrics are gradually catching "down" to earnings metrics, then we have a long way to go with quite many ups and down ahead of us, and the current down move might not be that final wash out after all, and much worse "conditions" might be necessary. Right now, after the big 640 Dow points drop (from the recent high at about 10723 on 3/19, to Friday's low of 10083, I have only 8 of the 30 dows in a clear down trend (T, GE, HP, IBM, INTC, MRK, MSFT, SBC), some of which have broken the September low while others could actually bounce from these lows. At the same time that we were threatening breaking 10,000 on the Dow, five of them actually made breakout patterns (KO, GM, HON, MMM, and PG), and of the following thirteen DOW components (AA, AXP, BA, CAT, DIS, DD, EK, XOM, HD, JNJ, MO, WMT, and UTX), I expect 6 to 7 to break out, at least temporarily, in the next few weeks. So, maybe in taking the "bigger picture view", death of the market is not yet imminent. Maybe few more months?
Zeev |
