Posted on Friday, April 25, 2003 - 2:43 pm:
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Have received pm's concerning the TSUNAMI SIGNAL and it appears some may have the wrong impression, since it is being associated with a crash, which I have never stated and is not the case.
The basic description of a TSUNAMI SIGNAL selloff is that the minimum selloff is 18% during a bear trend, the selloff period lasts approximately 6-10 weeks, and so far is 14 for 14(double tops counted twice-so far 2 double tops).
Of the 14 occurances, 4 occurred during the strong bull trend of 1999-2000 which gave declines of 12%, 8%, 13%, 14%. The 8% decline occurred in NOV of 1999 when the market was truly blasting off during the bubble.
8 occurred after the peak in 2000 which gave declines of 50%, 50% 45%, 24%, 27%, 46%, 24%, 18%. And there were 2 double tops after the 2000 peak where the declines in between the double tops were 14% and 8%. So one could argue that the success rate was only 12 for 12 with 2 double tops - regardless its either 12 for 12 or 14 for 14.
I was told that it was bad luck to say it, but it appears that the common characteristics of the TSUNAMI are LINING UP, and that is has started.
The TSUNAMI is not a crash, in the sense of a quick huge selloff, although a TSUNAMI selloff could be huge as mentioned above. There could be a series of up oscillations within the bigger move down, and commonly lasts about 6-10 weeks; if I recall correctly there may have been one that last about 3.5 months.
The TSUNAMI is based off of the NDX, and if I am correct the total minimum decline should be 18% with relatively smaller up oscillations in between. If the recent print at 1115-NDX was the top, I would be looking for a minimum decline to around the 914-NDX region. Keep in mind that 914 is still 120 points above last OCT's lows of 795.
These issues have been mentioned in our chats. Hope this better explains the TSUNAMI |
