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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: benwood who wrote (125561)	9/25/2001 4:51:06 PM
From: pater tenebrarum	Read Replies (4) of 436258

the primary fear remains that of missing the bottom and the subsequent rally. the danger of losing capital is not yet an issue. it's absolutely flabbergasting. here's a comment i posted to the LWside list yesterday: <<Russel remarks that in spite of the huge price falls to date and extreme readings in certain t/a indicators like the McClellan oscillator, he hasn't seen yet what he deems a true 'panic day' or "90% downside day" , in which down volume swamps up volume 9:1 and points lost vs. points gained exhibits a similar relationship. he seems to think that a series of such days in succession is possible at some point and necessary to indicate capitulation. those comments were made late last week, before today's big rally. it remains to be noted that today's rally wasn't met with much skepticism by option players. the patterns of intra-day put/call ratios suggest that puts were dumped at the open and not sought after subsequently. the big fall in these ratios in the wake of the rally suggests that participants are dying to be optimistic - and two more Wall Street firms upped their equity allocation percentage this morning by 5% each (to 70 and 75% respectively), which should keep Richard Bernstein's sell-side indicator firmly at all time high levels, a condition not consistent with lasting bear market bottoms. also rather unusual for marking a supposed bottom,the latest edition of Barron's magazine all but shouts on it's cover "now is the time to buy stocks". so if this DOES in hindsight turn out to have been a bottom of significance, it would be one of the best advertised in history. from a contrarian PoV this burst of defiant optimism would lead one to conclude that Russell will probably get to see his "90% down-side days" soon enough.>> additional comment: please note that the overoptimistic Barron's article referred to above talks about SnP earnings of $55 for next year - imho a ridiculous proposition. we are looking at about $35 THIS year. but the most important development from a sentiment standpoint remains Bernstein's WS sell-side indicator...to see it at an all time high is truly stunning. you'd think the market was pushing all time highs instead of collapsing. this in connection with the hopeful attitude of small investors (a global condition...polls show the small investor is STILL not scared enough to really think about liquidation) tells me that the bear is far from done with this market, intervening bounces notwithstanding. i'd be happy to be proven wrong by the market about this, but i have to call them as i sees them. as an aside, the collapse in Germany's "Neuer Markt" is now only exceeded by the collapse of the South Seas bubble in 1722 in terms of percentage lost. normally i would think that this loss would result in rampant bearishness, but that is obviously not the case - anecdotally, German market commentary is just as hopeful and complacent as that seen in the US.

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