To: Vitas who wrote (19263 ) 7/2/1999 10:48:00 PM From: pater tenebrarum Respond to
Vitas, a look at the Barnes Market Risk Index proves conclusively that reason is out of the window for quite some time now - which is to say that fundamental analysis of this market is a hopeless enterprise at this stage. i often mention the Fed's 'fair value' model in my posts, as it shows a disturbingly high deviation from the market's actual valuation. this means there is no margin for error in the market, which is priced for more than perfection by now. nevertheless, all these considerations are simply swept aside by the durability and the power of this mania. if you look at the perpendicular trajectory and the size of this week's advance, following of all things in the wake of a rate *hike* you have to admit that nothing seems out of the question anymore, not even the modest Dow 14,000 minimum target predicted by J. Favors (by october this year). there are even more inflated targets being advocated by other famous pundits, and i'm starting to ask myself if even those may turn out to be too low<g>. the only certainty i have is that it will all end someday, but if the end comes next tuesday(unlikely) or in two years time is anybody's guess. note that although this particular mania seems a record breaker in many respects, it is still trumped by the japanese mania of the last decade. since this is a record that still awaits breaking, and the Dow and the Nikkei were at roughly the same level in '69, Bear King's prediction of Dow 52,000 seems a reasonable bet.<g> having said all that, let me add that i agree with Bobby's assertion that the top will take most people by surprise, since there is no rational method (e.g.:'past tops coincided with an S&P p/e of 22') of determining where it will be. take for instance the fact that options indicators were screaming complacency and giving sell signals all week - the fact that prices have continued higher is an indication that these indicators are likely to reach as-of-yet unknown extremes as well before this is over.
