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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 685.66

+0.2%

Dec 5 4:00 PM EST

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To: Psycho-Social who wrote (71435)	3/7/2001 1:05:24 PM
From: lurqer	Read Replies (1) of 99985

believe this period is comparable to 1963 Like you, I consider both demographics and sentiment in formulating my market view. I believe the broad secular trends are demographically driven - e.g. the secular bull from '82 is an attribute of the Boomer Bulge. One way to measure long term sentiment is to consider average market p/e values. It is my belief that as a secular bull unfolds (and "buy the dip" continues to work), p/e's expand. They finally reach unsustainable levels and pull back. Still being supported by demographics, this p/e pull back is significant, but not radical. The radical p/e compression occurs later when a demographic trough triggers a secular bear market. From the above hypothesis, the resulting market behavior is that a secular bull spikes to a manic top, pulls back a little, and then puts in a broad range bound top before declining. I believe '66 was such a top and the serious p/e compression started in '72. If '00 is analogous to '66, we may have a largely range bound market prior to the beginning of a secular bear beginning in the second half of this decade - again triggered by a demographic trough. Like you, I'm not saying we'll follow each twist and turn of that period. But "past is prologue" and "history rhymes". lurqer

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