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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Zeev Hed who wrote (36932)3/4/2002 6:28:40 PM
From: XBrit  Read Replies (3) of 99280
 
EITHER we just saw a major intermediate-term bottom, OR we have yet another spectacular short-squeeze rally which will be substantially reversed within 5-10 trading days.

Looking at the Nasdaq daily candles on a 1-year timescale, there have been maybe 8 previous abrupt 2-3 day rallies, very comparable to the past 2 days. Only 2 of them have stuck... at the major intermediate-term bottoms in 4/01 and 10/01. So one would think statistically that the chances of this rally sticking are maybe 1 in 4.

If we look at the market declines immediately before the 4/01 and 10/01 bottoms, as you know, there was a clear quality of capitulation blow-off. An accelerating decline to a point of maximum pessimism. Such a quality is completely absent from the Nasdaq decline of the past few weeks. No downside acceleration, instead an orderly move within a channel.

So, based on recent history, the ODDS seem to be that the past 2 days of Nasdaq rally are unsustainable. Given the current levels of valuations vs. 2002 profit expectations for the semis (for example), I tend to feel that fundamentals also support this view.

I suspect we consolidate now for a couple days, and then much depends on what Intel says Thursday night.

Edit: full disclosure, I was caught leaning short the past 2 days and suffered. Maybe wishful thinking is interfering with my interpretation <g>.
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