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Strategies & Market Trends : MDA - Market Direction Analysis

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To: HairBall who started this subject	10/20/2000 4:14:56 PM
From: Saulamanca	Read Replies (1) of 99985

You can always count on a fall rally, except once this century. Message of The Markets by Ron Insana CNBC Anchor Today’s Message of the Markets: spotting bottoms in the stock market. I recently talked about using sentiment indicators to find a bottom, and as noted, the Chicago Board of Exchange's volatility index hit a level normally associated with extreme bearishness and market lows. Market historian, Jim Bianco of Bianco Research in Chicago, uses this opportunity to test the theory that suggests that meaningful stock market bottoms always occur in October. Looking at the three most commonly followed stock market gauges of any period since 1945, Bianco found the market almost never falls from the October lows. He looked at the market in years where there had been a decline of at least 10% from the September high to the October low, which for now, we'll assume occurred on Wednesday. Dow Jones Industrial Average six month chart Since 1945, the average decline from the September high to the October low has been 19.75%. This year's decline was nearly 12%. The average gain from the October low to the November or December high has been just over 12%. So after a difficult early autumn, you can always count on a rally. Bianco points out that if stocks were to continue lower in the November through December period, there is only one precedent for that in this century. That would be a period that began in 1929 and continued into 1932. That’s when the Dow declined 90 percent from a high of 381 in September of '29 to a low of 41 in July of 1932. Jim said that analog is simply "not good." But bets are obviously being made that the bottom is in and the next several weeks will be critical. cnbc.com

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