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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (27970)	8/5/1999 9:43:00 AM
From: Jerry Olson	Read Replies (1) \| Respond to of 50167

IKE from Tom Dorsey this morning...FWIW....From the Analyst 08/04/99 Choose an Archived Report Nyse Bullish Percent Reverses Down To 52% and Into Bear Confirmed Status -------------------------------------------------------------------------------- The big news this week is the decline in the NYSE Bullish Percent. That drop saw the Bullish Percent fall below 52% and reverse down on its chart. That moves the Bullish Percent into a column of O's and brings the defense on the field. The Bullish Percent is now 51.3% and is down from last week's 55% reading. We want to once again point out that this market reminds us a lot of 1996. The OTC stocks have led the way down and have been particulary week. The Nasdaq Composite has already fallen almost 10% from its highs. Back in 1996, the OTC stocks fell 19% from their highs and fell in short order. The Bullish Percent held up for a while back then before finally reversing down. The Bullish Percent has now reversed to the downside. Also back then, the 19% drop was roughly 1000 Dow points. We are only down about 9.5% in the OTC area and today that is the equivalent of a 1000 Dow point decline in the OTC area. We would have to drop another 1000 Dow points to equal 1996's 19% decl ine. However, once the carnage was over, you had to be there at the bottom and watching the indicators and the sector bullish percents because once they reversed, many began to take off. As we just mentioned above, the defensive team is now on the field. This does not mean you run out and sell every stock you own. However, you should review your portfolios. You don't want to give back the gains you have made since last fall when the Dow Industrials was around 7500. With the defense on the field, you want to make sure you protect those hard earned gains. A number of stocks failed to make new highs along with the market and are showing, at least on a short term basis, weak relative performance. These stocks you may want to sell or maybe tighten up your stop loss points on them. Should those stops be hit, then you will be raising cash to take advantage of the next opportunity that comes along. You have heard us express the opinion that we would rather lose opportunity than money as there will always be another opportunity and we want to have capital available to take advantage of that opportunity when it does present itself. You may want to hedge other positio ns. Hedging means different things to different people and we will have more on that over the next few days. Yesterday we reported that the far left column of the Bullish Percent Charts link page was the Daily Percent Change column. That was incorrect. The article should have stated that the far right column was the Daily Percent Change. Step 2 Yesterday we talked about step 1 of the 4 step process to investing. To day we will talk about step 2. This step answers the question of which sector to be in. You will recall that 49% of the risk in a positions lies in the sector. To evaluate sector risk we use Sector Bullish Percent charts. These charts are kept in the same fashion as the NYSE Bullish Percent chart. The only difference is the universe used to calculate them. A sector bullish percent chart such as the Aerospace Airlines is simply the percent of stocks in this sector that are on a point and figure buy signal. The same risk levels apply with the basic premise being is the offense (a column of X's) or the defense (a column of O's) on the field and what is the field position like. When evaluating the sector bullish percent charts it is important to notice previous action in the chart to gain some insight as to how the sector generally performs. For example, the Drug sector has a habit of reaching the mid 60's and then reversing down. So when you see this sector in the mid 60's you can pretty much say that the field position is poor and that there is a good chance we will see it reverse down from this area. Also the Semiconductor index. This chart recently rose to the 86% area level not seen since 1995. When the sector reversed down last June it was certainly not time to be buying the group. Ideally, we like to buy the sectors that are in a column of X's and below 50%. At this time the pickins are slim as there are not very many fitting that description. Only the Banks, Real Estate, Textiles and Electric Utilities are in X's below 50%. The risk level of these charts can be seen in the Bullish Percent Charts link off the Main Page. By evaluating the market Indicators as well as the Sector indicators we are able to address the majority of risk in a position. -------------------------------------------------------------------------------- While we make every effort to be free of errors in the data on our site, 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

To: IQBAL LATIF who wrote (27970)	8/5/1999 10:18:00 AM
From: SE	Read Replies (1) \| Respond to of 50167

IKE, Any word from the pits? What is the feeling down there..... -Scott