Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: Chip McVickar who wrote (44561)	11/11/1999 3:28:00 PM
From: Terry Whitman	Read Replies (1) of 94695

Chip, I see you are still watching the soldiers. Conventional market wisdom has always said that the generals can progress without the soldiers for a while, but the soldiers can never progress without the generals. I wondered how I could prove or disprove this theory. I overlaid a chart of the Value line VGY to represent small stocks(or the soldiers) with the SP500 to represent large caps (the generals) quote.yahoo.com^VLIC&d=mys It clearly shows that the theory is true. All the way back to 1987. The divergence has grown ever since. It can close for a month or two, but always grows more in the end. The only clue as to when they might converge is the last major convergence, the crash of 1987. In the Short term, quote.yahoo.com^VLIC&d=1ys the divergence has increased considerably over the past year. There are some short periods where the two converge, but the soldiers have continued to be hurt worse than the generals in the end. I suspect more of the same till it changes. The bulls may not like it if it changes.<g> A possible hedge play on a ST convergence may be to go long the R2K and Short the SPY. All bets are off if the BC (Big Convergence)hits. <g> Regards, TW

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