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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 685.66+0.2%Dec 5 4:00 PM EST
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To: HairBall who started this subject3/29/2001 7:01:52 AM
From: s berg   of 99985
 
psysocmarper, Re Sell-off after Pre-Statement Rally:
I think your point about a 20% loss threshold is important. Hulbert had a NYT article about how a market timing system that worked for 70 years, getting out when market below 200 MA failed during the current bull run. Investors have been conditioned, in a way not c/w long term market history, that the worst you can do in the dow is a 20% loss, so less risk now. If they get a level of loss in their retirement portfolios not c/w their bull market 20% loss conditioning, they may panic.

From a TA perspective when the market repeatedly fails to mount intermediate term rallies from oversold stochs does that mean that a crash is imminent. Sentiment measures you and others post here may also be c/w with risk of crash. Just the fact that no one is talking about the risk of a 20-70% crash when they should be IMHO, is itself a contrary indicator.

These type of market conditions fortunately are rare enough to preclude using TA based on past market behavior to predict a crash. The stock market is behaving, in terms of volatility and parabolic rises and falls, like a commodity market. Anyone out there with TA commodity experience have an opinion about whether current conditions favor a crash or not.
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