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Strategies & Market Trends : Waiting for the big Kahuna

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To: pater tenebrarum who wrote (42913)	8/11/1999 12:31:00 AM
From: donald sew	Read Replies (2) of 94695

Heinz, I just went thru 18 years of data on the NYSE, to see if there is anything statistically viable concerning "W" shaped bottoms. For corrections of 7% or greater for that time period most of them had either a "W" shaped bottom or some sort of a retest of the LOWs before rebounding strongly. Heres the DATA, YES means "W" shape/other retest of lows: SEP 98 - YES OCT 97 - HIGHER LOW APR 97 - LOWER LOW JUL 96 - YES NOV 94 - YES APR 94 - YES APR 92 - YES SEP 90 - YES DEC 89 - YES APR 88 - YES OCT 87 - YES MAR 87 - YES JUL 86 - YES SEP 85 - YES JUN 84 - YES JUL 82 - "V SHAPE" MAR 82 - YES JAN 82 - YES SEP 81 - "V SHAPE" I eyeballed the charts so I may have missed on a few. Also to be really statistically viable I should have checked 32 of them not 20, but my eyes were getting crossed. ggggggggggggg So of the 20 times that there was a 7% correction or greater 16 of them formed either a "W" bottom or some sort of a retest of the LOWs. Also, only 2 of the 20 had "V" shapes. For this specific discussion, lets say it is a correction in a BULL market and nothing worse. Based on the above data the is only a 1 in 10 chance that the rebound will take a "V" shape, and 9 out of 10 chance that some sort of subsequent dip will occur before the rebound is in full force. My point is that it may be more beneficial to wait for some sort of a retest/subsequent dip than to go bullish at this time. Yes there is a chance that it may take a "V" shape but the chances are slim. Also keep im mind that for this discussion Im working with the assumption that the market did bottom, which is still questionable, so the odds are against those going long right now. Im not talking about scalping but longer term positons. Again, I am not saying that a "V" shape rebound cant happen, just that the odds are very slim. seeya

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