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Strategies & Market Trends : Waiting for the big Kahuna

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To: Vitas who wrote (31056)	10/12/1998 10:27:00 AM
From: bearshark	Read Replies (1) of 94695

Hi Vitas: I saw the date of the book on the 5-day ARMs--1972. I tested the 5-day ARMs over a period of decades. The only time that I have seen the 5-day ARMs work flawlessly was between the dates of about 11/97 to 1/98. Other than that, it has been generally unreliable. There are periods of time where it worked but there are others where it continually gave false calls. Based on my experience with it, it may confirm trends but even that is not completely reliable. When a trend is established, the 5-day ARMs will give one wrong reading after another. The reason for this is either the strength or weakness in the market. The 5-day ARMs tells us where the big money is going. Over the last several days, a lot of money was going into big stocks beyond what I consider normal. That caused the 5-day ARMs to give a sell signal at Friday's close. Based on that, we should begin selling off today or tomorrow. If that happens, it would be a valid call. Last week the 5-day ARMs gave a buy call that did not work. I felt that the 5-day ARMs was confirming a downtrend. If the current sell call works with a 100 or more point decline in the DJI coupled with the possible confirmation of a downtrend last week, then I consider the major indices are still in a downtrend. On the other hand, some things have begun to turn positive over the last couple of days. If the current sell signal does not work for a few days, it may pay to keep a close watch on the next decline for a possible rally that takes us back into the major bull trend established since 1994. I still do not have an initial confirmation of a bear market based on my trendline from 1994. It continues to rest at around 7700 and has not been seriously breached on a closing basis.

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