The Market...
***************
are you expecting a bottom and a resumption of the bull market, a bottom that rallies and then heads back down. Are you basing your assertion entirely on the relationship to the 200 day SMA of the INDU and NYA? TIA
LG:
I use trendlines and exponential moving averages... For this analysis I looked at the last three corrections in the Dow, S&P-500, and the NYSE for 1997, 1998, and 1999, using a 200 day moving average on the weekly chart... In each instance, the correction ended between 18% to 25% above the 200 day moving average on the weekly chart... Because it's a weekly chart we are really looking at a 200 week moving average... That's four year's worth of average... It has all the peaks and valleys in it... It tends to give a more reliable and smoother picture than the shorter term charts when analyzing market turns... With the exception of the S&P-500, it looks like we are getting ready to resume the uptrend in all indices soon...
The economy is too strong for a recession right now... The technology sector now dominates our economy... The constant productivity improvements allows for relatively low inflation... With current inflation in the 2.00% to 2.50% range, real interest rates should be about 4.00% to 4.50%...
As the FED revises its economic model to account for a technology/information/services based economy, we should see rates come down in the next few Qtrs regardless of what happens in the next two months... Greenspan has already hinted at the weight of technology in our modern economy, and its productivity benefits... That's the first step towards a revised FED economic model which should be good for lower interest rates... Lower interest rates are good for the markets... So, looking out six to nine months to discount this change in FEDmind, we should see a resumption of the rising markets soon...
Caveat: New Lows and the A/D line on the NYSE need to show some improvement to confirm the next up leg in the markets...
Jim |
