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Strategies & Market Trends : Classic TA Workplace

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To: bcrafty who wrote (77784)	7/22/2003 10:11:26 PM
From: John Madarasz	Read Replies (1) of 209892

any short term weakness probably should not be overplayed... 7/22/03... The Specialist Short Ratio came in at a low 32.6% this past week, which makes the sixth week out of the past seven we've seen a reading under 35%. This has bullish implications for the next few months, as consecutive readings below 35% typically signal a rally is in store. The reasoning is that specialists have been forced into buying stock week after week as the public bets heavily on the short side. Since the public is invariably wrong about the stock market's prospects, this long period of accumulation by specialists and selling by the public typically comes right before significant rallies in the market. Since 1970, there have only been eight other instances in which the Specialist Short Ratio came in below 35% in six of the past seven weeks. In every case, the S&P500 was trading higher both three and six months later. And in case you didn't notice, this bullish setup was triggered for only the ninth time in history on July 3rd. Whether it can make good on this latest signal remains to be seen, but the notion of a big selloff heading into fall appears unlikely, at least according to this indicator... Specialist Short Ratio under 35% six out of seven weeks 07/03/03... ??? 03/14/03... +18.5% three months later 10/04/96... +7.9% three months later 07/19/96... +9.8% three months later 09/22/95... +6.0% three months later 10/07/94... +0.9% three months later 12/09/88... +5.1% three months later 06/08/84... +7.4% three months later 06/18/82... +12.8% three months later www.astrikos.com, excerpt used with permission My chart from last week... 7/15/03 SPX Weekly Inv H/S with measurement boomspeed.com

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