Hi Chip, we have discussed that Diamond type pattern in the DJIA over the past year. I don't know how the
pattern is going to work out. The Pattern does look kind of like an analogue of the DJIA's performance,
from the 1960's to the early 1982's, that has not changed.
Ed Yardeni makes some good points in his latest email:
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Sunday afternoon, March 4, 2001
COMMENT: Just another quiet Sunday afternoon with the family waiting for the
Perfect Storm. According to the weather reports, the blizzard heading our
way could be one for the record books. Or we might miss the worst of it. It
reminds me of the debate about the outlook for the economy and the stock
market: The worst is still ahead, or it is just about over. According to my
Stock Valuation & Allocation Model, the S&P 500 is now only 2.4% overvalued,
down from the 70% off-the-chart-bubble reading at the start of last year. It
now recommends raising the stocks/bonds ratio from 70/30 to 80/20 for a
large equity fund. It is possible that stock prices might continue to fall
pushing the model into undervalued territory, which would suggest an even
higher ratio.
SUBSCRIBERS: I could be wrong, but I doubt that stocks will become seriously
undervalued. I am betting that additional Fed easing along with tax cuts and
lower energy costs will revive the economy, earnings, and demand for stocks
by the middle of the year. For more on the Fed and earnings, especially in
the beaten-up tech sector, see my latest GLOBAL PORTFOLIO STRATEGY. If we do
get a blizzard, I'll do my Monday WEEKLY AUDIO FORUM from home. We'll
discuss if tech earnings are nearing a bottom yet, and other topical issues.
PUBLIC: At the end of last year, my Stock Valuation & Allocation Model
recommended an 80/20 stocks/bonds mix, up from 70/30 for a large equity
fund. It worked very well in January. Just after the Fed eased on January
31, I changed my recommendation to 70/30, bringing me in line with the
consensus of Wall Street strategists. This was another relatively good call
for the model as stock prices fell, while bond prices rose. Now the model is
back to 80/20. It is updated daily and weekly at
yardeni.com. The March issue of the GLOBAL
STRATEGIST'S HANDBOOK is now available in the STOCK LAB. The KEY WEEKLY
indicators on the home page can help you assess whether the worst of the
economic storm is behind or ahead. Check out the WHAT'S NEW page for the
latest updates of our valuation scoreboard and our P/E chart book. |
