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Strategies & Market Trends : Waiting for the big Kahuna
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To: Joan Osland Graffius who wrote (6481)10/16/1997 9:45:00 PM
From: bearshark   of 94695
 
Joan: My opinion of this market has not changed at all since my first note. I beleive the DJI peaked in August at about the same time of the UPS strike. I believe we will see 3,500 before 10,000 in the DJI. I am anticipating a classic bear market but I have not had the time I had hoped to plan for it. However, I continue to hold my last long position of this bull market waiting to give it to someone at the right time.

I have tried to rework some of Edson Gould's techniques. My preliminary work shows a bear market confirmation at somewhere around 7,000 on the DJI varying some depending on the timing. Until I rework my numbers and get that confirmation, I will not trade this market. Somewhere beneath that level we will have a bear rally. That should indicate the strength of the bear market. If we do not hit my confirmation point, I will not be a true bear.

For someone bearish, the problem with this market is that there is a very strong bull mentality. Additionally, when a bear market is perceived by the Fed, they will try to fight it. They still remember their success in 1987. That will have to be overcome and it will. Eventually, there will be a very bad down day. That will test the circuit-breakers and all the various partial and full trading holidays that were dreamed-up That should be amusing.

Edson Gould's work focused on the humans that make the market. It is his version of technical analysis, that I beleive in. I only use fundamental analysis to identify investment or trading vehicles that are appropriate for the market scenario. Maybe that may explain the difference between my belief and Merril Lynch's.
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