MARKET PHASE UPDATE:
Nearly all indications point to the current market phase as Phase of 1 of a cyclical Bull. The length of a cyclical bull phase is generally 6-9 months, so we are nearing the mid-point of this phase.
Several confirmations of the Bull 1st phase have occurred recently.
A/D Line: Has traced out previous long term decline, and has moved above a previous interim high.
geocities.com -Thanks Vitas.
NewHighs and Lows: There has been a climax of lows in the past 9 months, & since that time, the number of new highs has been consistently outnumbering the new lows.
stockcharts.com
Dow Industrials: Made a major bottom some time in the past 9 months, confirmed by the Transports. Has a clear pattern of rising bottoms and tops since then. The 200 day m.a. has been in a long decline, and the industrials penetrate that line to the upside. finance.yahoo.com^DJI&d=c&k=c2&p=m50,m200
Dow Transports: Should basically mimic the industrials- finance.yahoo.com^DJT&d=c&k=c2&p=m50,m200
Other Indications that confirm-
50% Rule: If the Industrials have retraced more than 50% of the complete bear market decline, the evidence is compelling that the market is in the 1st phase of a cyclical bull market. 50% retrace point of the 2000-2001 INDU bear market decline, 9985.
News: News is generally bearish. The 1st phase of the bull is never met with good news. The news is most bearish during the 1st three months of the phase, lessening after. The country is often in recession during the entire 1st bull phase. The public worries over news headlines. The market shrugs off the bad news and climbs the wall of worry. Public disbelief that the market can rise in the face of such poor fundamentals is great evidence.
Number of mergers, secondary offerings and stock splits is low, relative to previous.
There you have it. This bottom has been a lay-up, IMHO. Even came at the right time of year. Probably the only major move I'll make over the next month is to perhaps lighten up on small caps, and add to larger ones as the disparity between them should begin to close.
Regards,
TW
My last Market Phase call, Bear 3rd of 3, Sept. 01'.
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