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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: Sully- who wrote (22037)	12/5/2000 4:56:12 PM
From: lurqer	Read Replies (2) of 65232

Care to expand on that scenario? Only on a FWIW basis. This past weekend, believing that the non-election period was (maybe) drawing toward a close, I started trying to think about what's next? Came up with several scenarios. The inverted head 'n' shoulders scenario assumes (in a zero sum way) that there is only so much "froth" that has to be eradicated in a bear correction (Yes, I still believe we're in a bear correction within a secular bull market). If we consider a classic bear correction (and the market can always toss in a non-classic wrinkle), there are three down waves labeled Denial, Fear (anxiety) and Capitulation. If you believe we've already had Denial in the spring and have now had (note past tense) Fear exacerbated by the non-election, then we still have Capitulation to endure (maybe in the first half of '01). Now while there is nothing definitive about the relative depths of the three down waves, many observers like the Capitulation wave to be the worst to "wring out all of the excesses". Prior to Nov. 7th, I would have subscribed to this view. However the non-election "kicker" that we've had to the Fear stage has done a lot of wringing. Has sufficient bullish froth been removed so that the capitulation phase will be more anemic that it would have been? Probably so. But will the Capitulation dip now merely be a shoulder to the Fear head? Hard to tell. My final conclusion this weekend was that the IHNSS (inverted head 'n' shoulders scenario) depended critically on the the timing of a FED easing - with a change in the bias (even if it's no longer called bias) needed in December. For IHNSS to become my "best guess" scenario, the December Fed meeting would have to be very different than the November Fed meeting. Today was a good start. <gg> I'll part with my non-denominational, astronomical year-end greeting: Solstice Salutations! lurqer

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