Justa,
>>>> Normally, I might be concerned with this point as it sounds reasonable. BUT one should note that during the April 4th bottom, the SOX not only lagged by a few days, but it also retested its lows on April 9th whereas the COMP did not. The COMP gapped up and did not look back. The COMP lead that rally; the SOX followed. So it is reasonable to think then that the SOX must participate but does not have to lead the initial up <<<<
Forgot to mention something in my previous post. Again, your comment is valid. However, all it proves is that nothing is 100%, and does not invalidate that the SOX is a reliable leading indicator, since it may have failed to lead with any significance a few times.
So the question becomes - if there is a pattern that occurs with good reliability/probability, but there is a time when it did not work - should we say that the original pattern is no longer valid. In no way am I saying that you said that or even imply that. The reason I mention that is with a failure of a pattern we should reanalyze the probability of the original pattern, since the failure may be a hint that the probability of that pattern may be changing. Another possibility is that such failure may not be within the normal parameters of the pattern. As you stated previously, the SOX did not lead at the APRIL bottom. It may be possible that with EXTREME SELLOFFs, the SOX may not have to lead. If that continues and becomes statistically viable, then a subset of the original pattern needs to be established just for EXTREME MOVES.
Gosh, after rereading my post, now I know why my kids always say that I over analyze things to death.gggggggggggg |
