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Strategies & Market Trends : The Stock Market Bubble
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To: bobby beara who wrote (744)7/20/1998 9:57:00 AM
From: Les H  Read Replies (2) of 3339
 
I use the Summation Index and the 27-day Advance/Decline Index. The two breadth indicators are lagging in the same manner as in late January/February of this year for the OTC. Only the Summation Index for the NYSE lags the comparable period in February. I don't use the normal Advance/Decline Indicator; it's extremely flawed. The 14-day RSI and 21-day Stochastic are at the same levels as February.

The larger cap stocks almost always lead out of the gate. The smaller caps follow later when confidence builds. I did not make a prediction of where the market might go but an observation. I suspect it will keep running till the end of July before a pullback. If the pullback stays in the upper half of the trading band (a 4% correction), the market will likely continue higher into early Fall. Otherwise, there will be more consolidation ahead. There are some blow-off tops and there are also a much larger number of stocks that are in consolidation patterns after a lift from their lows also. I see a large number of stocks that have come up to their previous peaks and formed handles. Still others that have come halfway back to their highs and gone into sideways patterns.

Unfortunately, many of the same indicators that give off flashing "signals" at the end of a bull run also give the same "signals" at the beginning of runs. Oscillators, breadth indicators, primarily. Notice at the start of runs, most stocks if they are to be strong, will quickly become "overbought" and stay "overbought" until their momentum slackens.
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