Good Morning IKE....hope all is well..
here's todays report from Dorsey re: the markets..please note the NUMBER!!!! like i said the surprise is to the upside...we are converging, both indicators and indexs...POWERFUL MOVES COMING!!!
From the Analyst 04/13/99
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"A PICTURE IS WORTH A THOUSAND WORDS"
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This market has been the most interesting market I have seen in my 25 years in the business. The picture below shows exactly what happened so far this year. The two pictures are of the Sector Bullish Percent Bell Curve. On the right side of center is overbought. Conversely, the left side of center is oversold. Notice how all during the time the Dow Jones and S&P 500 moved to all time highs, the sector distribution has shifted from overbought to oversold. What just might happen from here is the small or average stock begins to gain some sponsorship, which causes these value stocks to outperform the broad averages. This could be very similar action to what we saw from 1991 - 1994 where the S&P 500 rose about 35%, but the Value Line Index rose 85% and the Russell 2000 small cap index rose 90%. Our short term indicators have moved to positive once again and this dictates we make long commitments with STOPS ENTERED. The Optionable Stock Bullish Percent is about .5% away from a reve rsal up to X's although the breadth was not much to write home about. The new highs and new lows have turned around at this writing. One thing I would still like to see is if this buying pressure persists following tax, IRA investment cutoff in two days. We do know that investors are pouring money in right now to catch the April 15th cut off date for contributions to their IRA's. With our indicators starting to turn positive, corrections are likely to be buying opportunities. Until the NYSE Bullish Percent reverses back up, buy all stocks on pullbacks to support. This can give you, in some cases, a 20% advantage.
The real question now is this: is it worth switching to the small stocks even if they do outperform the large stocks from here? If the sponsorship in small or value stocks also pushes up the large stocks, is it worth switching? When one does a vertical count on the Dow Jones Point & Figure chart using a 100 point per box chart we get a possible move in the Dow Jones to 13,000. We aren't predicting. We will always follow the indicators. The short-term picture is up and we always play the short term as it often turns into the long term. Until the NYSE comes along we will enter stops on all positions the moment they are bought. If this turns out like July of 1998, the stops will take you out at the right time. If your stock rises from purchase price, follow it up with stops. Hopefully when the stop comes it is with a profit.
SECTOR BULLISH PERCENT BELL CURVE
January 20, 1999
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BUIL AERO
SAVG AUTO medi
asia BANK RETL WALL
MACH tran INSU FINL
OSRV TEXT food COMP DRUG
OILS PREC STEL chem leis HEAL FRST TELE util SEMI
WAST metl latn REAL REST GAME BUSI SOFT GAS PROT EURO
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10% 30% 50% 70% 90%
April 7, 1999
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buil |
util soft |
prot retl |
hous biom |
gas OILS |
tran leis frst |
prec finl insu |
real heal mach text | WALL
chem food elec asia REST OSRV
metl busi drug aero savg GAME SEMI
stel WAST comp bank auto TELE medi euro LATN
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10% 30% 50% 70% 90%
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it is derived from data from other sources. We believe these sources to
be reliable but we cannot guarantee their accuracy.
Copyright © 1995-1999 Dorsey, Wright & Associates, Inc.
Disclaimer.
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