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Biotech / Medical : VD's Model Portfolio & Discussion Thread
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To: Biomaven who wrote (7916)5/2/2000 10:57:00 PM
From: scott_jiminez  Read Replies (1) of 9719
 
<<I'm not claiming these charts have any predictive value >>

With so much statistical info available now, one must exercise extreme caution in anyone claiming predictive value for any supposed correlative measure (i.e. anyone can now dig up statistics to support just about any theory).

There is one 'old-time' measure which is readily available on a daily basis...and which the New York Times just happened to display in graph form this morning: the NYSE advance/decline line. While many folks may dismiss this gauge as far to broad to be meaningful, it is precisely this characteristic that may most tellingly show major shifts in market sentiment.

The graph published in this morning's paper may be indicating just such a shift. The advance-decline line is displayed as being in a free-fall since last November (and I'm aware the drop started last summer). Surprisingly, a bottom appears to have been reached in mid-March. While another bottom was hit in mid-April, it was higher than the March one and we've seen a steep improvement in the last two weeks. Thus a double bottom with higher lows and a bias towards the upside.

While it's obviously too early to say this is the beginning of rally with a strong foundation (a compressed version of this pattern occurred in December-January), a significantly improving A/D line suggests broad market participation on the upside.

If nothing else, the pattern suggests a significant bottom may have been made and that munching in the debris field of biotechs may, alas, be prudent.
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