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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: Jack Park who wrote (5587)9/8/1998 1:48:00 PM
From: OldAIMGuy  Read Replies (3) of 18928
 
Hi Jack and Julius, My Best/Worst indicator is, in a way, similar to the idea of looking at how many funds are way up or way "over-sold". There's 41 stocks in each of the best and worst performers lists in Value Line each week. I use their relative rise and fall to determine market speculation. For the last few weeks there's been a big decrease in speculation as measured this way. The bad boys are much worse than the good boys are good!

The biggest problem with this particular indicator has been that periods of speculation can last a very long time. So judging the "time to bail out" is still not clear. In fact not much of the Idiot Wave has been designed to give such a signal. Rather, it's been designed to give a relative risk reading. What's been clearer for this indicator is the "over-sold" readings. When the B/W index goes to negative values, it is usually a good short term indicator of "over-sold" condition. Market rallies like the one at the beginning of this year were nicely foreseen by the B/W index. I expect that the Value Line data for this week will confirm this condition once again. In contrast to the long periods of high speculative activity, the time spent "over-sold" is extremely short.

Best regards, Tom
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