Michael,
This one is looking more and more like a description in "Technical Analysis of Stock Trends", the original bible of TA. I'm not much of a technician myself, but their description of the final stages of a bull market is striking:
"...new issues are brought out in increasing numbers. It is during this phase that one of your friends will call up and blithely remark, 'Say, I see the market is going up. What's a good buy?' -- all oblivious of the fact that it has been going up for perhaps two years, has already gone up a long ways and is now reaching the stage where it might be more appropriate to ask, 'What's a good thing to sell?' In the last stage of this phase, with speculation rampant, volume continues to rise, but 'air pockets' appear with increasing frequency; the 'cats and dogs' (low-priced stocks of no investment value) are whirled up, but more and more of the top-grade issues refuse to follow."
That last sentence really speaks to me today. Every major stock got creamed today, primarily because of an issue that every knowledgable person I know believes is temporary. And in the midst of this the "cats and dogs" were up, presumably because they have so much growth ahead of them that they are "safe havens" when the companies with actual assets and valuable technologies are going down.
I think we're set for a major correction somewhere in here, and that there WILL be a flight to quality. Not sure exactly what will set it off, but the effects of SEA are a likely culprit. It'll have to hit one of the major "non-tech" companies before the market gets the point. Banks? Airlines? Autos? Overall consumer spending?
mg |
