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Strategies & Market Trends : Technical analysis for shorts & longs
SPY 652.53-1.5%Nov 20 4:00 PM EST
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To: Johnny Canuck who wrote (37468)6/28/2002 11:04:50 AM
From: j g cordes  Read Replies (2) of 68168
 
CHALLENGING THE NOTION OF GRAND CAPITULATION..

" I suspect the ultimate bottom will be marked by investors, traders, and speculators alike swearing off any type of risk what so ever. In other words, there will be no interest in the stock market. People will react the same way they did in the 1930s by vowing never to invest in the stock market again. That will be the type of sentiment needed for this market to put in its ultimate bottom."

This notion that markets MUST swing from extreme highs to extreme lows in concert is suspect in my opinion. For my analysis I'll use a concept one can visualize easily.

Imagine tethering a weight to a rope about fifteen feet long then swinging it over your head in a circle. The weight represents high flyer stocks, biotechs, nifty fifty, technology, nanotech.. whatever the next revolutionary investment idea is. It swings north with greater velocity than the center of the market and it swings south with greater velocity. If the weight of the high flyers is large it moves the center and the two are displaced.

Enough of this analogy.. the point is, a percentage of stocks, NOT ALL, were in a high velocity orbit sufficient to displace most expectations. A lot of stocks, especially the high flyers, were brought to velocities that broke their tether with reality and they've spun off to extinction and others have crashed... but the center remains, has gravity and will continue to attract capital.

Jim
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