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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote ()2/4/1997 5:00:00 AM
From: Kevin OBrien   of 94695
 
Great topic Bill. I once forecasted the low and bi-monthly points in another market 18mths out and got the date within a fortnight and the index within 3 points. The dividend yield gap was the clue.

Hype & general excitement is not to too high yet and predicting quantitative corrections from social phenommena is virtually impossible.

You can however place top & botom lines on log-scaled long-term index data and expect the market to move within these. It can show very clearly As the top line is at a steeper slope to the bottom one can also expect that the swings in the market will become more pronounced in absolute terms over time. Intermediate 'corrections' will also be greater likewise. To put it in perpective a 100 point drop from an index of 7000 is only 1.5% approx. A real bear market may have a 30% drop over a 12mth period. I need to bring my data up to date on this market and certainly will do shortly.

It not to be unexpected that we have a major bull phase as we have come off the bottom of the Kontratieff cycle and we can look forward to 30+ years of general prosperity with the usual intermediate corrections.

Further food for though is what drives these business cycles.

A good source of data is Business Week and the Economist (UK).

Kevin O'Brien
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