Nancy; RE:"curious that you have not mentioned such model before"
No. It's not a trading model, Nancy - it's a model that one of the SI members runs from time to time, and he sends us these charts by E*MAIL.
Before the crash, Dolinar sent us a chart showing a precipitous and sudden drop in the DOW. Scared the hell out of us, but we were in a solid UpTrend, and even INTC had not fallen below 90 at that time. This was in early October, if memory serves me correctly.
On 18-NOV, the professor sent me another chart. This one showed a trading range between DJIA 6800~7300 around Christmas.
But, this is nothing new, is it? I mean, look at the charts, Nancy: if we do break the panic-support levels, you can see that this is the most likely place the DJIA would next consolidate.
The extent of a fall is not difficult to see. In Downtrends, at least we have the benefit of seeing where previous trading ranges were by looking at the history on our charts.
What we do not know is this: (1) is the market going to go down and break the panic - support level in the first place? and (2) would such a decline be sudden and precipitous, or a slow, agonizing devaluation of equity values ?
The reason why I mentioned Dolinar's chaos-driven model today was that Judy and Tom were talking about possible market scenarios, so I thought I would project out where I thought the DJIA might stabilize in the (possible) scenario that we do lose our panic-support level: Judy has stated that she feels like we have one more down-wave to go; and further, that we have no base upon which to rally from. Tom has mentioned the possibility of a "rally which no one expects, but persists".
I mean, we could talk about resistance levels - SPX 950 is an important one, and we're bouncing up there right now.
Wow - I didn't mean to frighten anyone! Surely you all must have looked at your charts and identified not only all the (UP) resistance levels, but also all the (DOWN) support levels.
-Steve |
