<It is interesting to note that after the N225 hit its first big low coming off the 1989/1990 top, the lows were not revisited for another 14 months or so. >
Note that N225's low, however, was the equivalent of our 1998 low - they had given up two years' worth of gains. That remains far, far below our present level. We *must* give up at least all of the prior years' gains *and* develop some measure of fear before that intermediate-term rally can begin.
And note that in 1929-32, there were basically *zero* bear market rallies after the first rally off the break. There were a couple of three-month pauses in the decline, but that was all.
No, this is wave three, and in wave three there is nowhere to hide. This has been supported by the failure of names like BRCM, NTAP, JDSU, PMCS, AMCC, and SUNW, but there are names that remain suspiciously absent. They will join before a meaningful rally can develop. I await failures in analog semiconductors - MXIM, ADI, LLTC; market titans CSCO and GE; and financial catastrophes-in-waiting like JPM, C, and PVN.
This is the phase where most stocks move to fair valuation. The final phase will be where fair valuation sinks and takes the stocks with it.
BC |
