from a newsletter dated January 18,2000.. a prognosication, one of a half dozen I've found: Nasdaq Composite, and the Russell 2000. ''.. Those all time highs should provide some pretty stiff resistance, and a turn down would set up a double top formation. At the same time that the market is approaching that overhead resistance, we see numerous bearish divergences in our internals indicators. In other words, pretty much all of our indicators are at lower readings than the last time the market was up at these price levels. These bearish internal divergences are very reliable indicators, although they sometimes stretch out for a couple of weeks before the hammer drops on the market. [really? bearish divergence usually straightens out in time to turn into bullish divergence if you put down the text book long enough to look at the reality out there in the real world, don't get caught up in Technical analysis mumbo jumbo.. Bearish divergence rarely works as an indicator.. maybe 1/10 the time bullish divergence works] Just wait the for the whole indicator to move.. a whole set of trending and/overbought indicators, you need a lot of confirmation for an indication of trend change. Bearish divergence is what the techo analyst gets excited about and its pretty much worthless as an indicator for any sustainable period except maybe 10 minutes.
Okay today is February 23, fully 4 weeks and a good deal of our stocks have been up 100% and more since the 'prediction' so when is the sky falling? And if it does its far better to be at least partially invested, even 25-30% invested will give you good gains rather than fortify your underground shelters with chestnuts bracing yourself for the 'spring thaw'.. You don't have to trade wildly, but nor should you give up any opportunity because for the last 2 months the Nasdaq was supposed to 'correct substantially'. Why? Because the indicators say so. And what if the indicators are only a product of our historical pasts, why can't we bring the 'overbought' up a rung like I've done with watch lists for the past 6 months.. and don't assume 'oversold' means its a great bargain.
What I do think is that we will have continuous 2-5 day corrective moves within the sustained and ever-sustaining tech/biotech economy. Furthermore instead of fortifying yourself for the spring, I'd say April/May will be another whopper of an earnings season so we tread lightly, a long day trade or swing trade will do fine until you have the inevitable repeat from the last 5 years First week in April: Some companies will pre-report short falls, everyone will get in a panic thinking the market is going to hell in a handbasket.. corrections will make our earnings plays more affordable as sellers rush in to sell driving the prices down, until the last of the panic ridden masses are shaken out.
By the middle of April tech earnings will trickle in and a massive sigh of relief will be heaved as more and more companies earn more, mirroring the technical advances, ravaneous desire for more and more internet, bandwidth, new operating systems, mini-micro processors, chips, high definition video, audio, etc. enhancing quality of life, eradication of some diseases, or at least the closing in on some major discoveries.
Not only that but globally everone will want to partake in this this 'new economy' and why not? So we have a reining in of the interest rates once in a while. Its the techs that do it, so we stand for it and watch the more interest sensitive equities buckle while techs plow onward.
Of course there will be volatility, but then with volatility comes 'relief, renewed uptrends'... all kinds of goodies.. Just play your uptrending stocks and exchange them for newly corrected stocks when the trend turns. There are no guarantees but the playing field is a lot more fun than the Feds would have you realize. |
