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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dclapp who wrote (26233)	9/18/1999 12:56:00 PM
From: Robert Rose	Read Replies (1) \| Respond to of 99985

<As a previous Reuters article noted, one research firm concluded that "the average stock in its 7,736-stock data base has fallen nearly 20 percent since April 1998."> Ok, so we're in a bear market, as the above, a/d and other indicators suggest. Nevertheless, some stocks fly convincingly in the face of that trend. So why not just pick those stocks, ride that wave, and stop labelling the market "bull" or "bear," or even caring much whether it's one or the other?

To: dclapp who wrote (26233)	9/18/1999 1:43:00 PM
From: keith massey	Read Replies (1) \| Respond to of 99985

Some food for thought...... The average length of a Bear Market is 17.4 months, the average decline is 30.8% As a previous Reuters article noted, one research firm concluded that "the average stock in its 7,736-stock data base has fallen nearly 20 percent since April 1998." So we have been in a bear market for 17 month and have declined 20%. So we drop 10% in the next two weeks and the bull can continue<ggg> Actually I am longer term bearish for many of the reasons mentioned on the thread but the numbers are interesting. Best Regards KEITH

To: dclapp who wrote (26233)	9/18/1999 2:28:00 PM
From: Berney	Read Replies (2) \| Respond to of 99985

Doug, Re: The Sky is Falling Warning -- An Equally lengthy response. As a genetic number cruncher, the hair on the back of my neck always stands straight up when I see comments such as the following: <As a previous Reuters article noted, one research firm concluded that "the average stock in its 7,736-stock data base has fallen nearly 20 percent since April 1998."> First, April, 1998 is a strange date to start! Sixteen months for a study appears to be the ultimate misuse of the scientific method; that is, we start with a hypothesis and attempt to prove it. Next, based on my data base, when I see a study reflecting a "7,736-stock data base" or all stocks on the NY Exchange or all exchanges, it fails to consider that many of these are non- U.S. companies. My data base reflects 725 foreign companies. Now, their one year performance, compared to the Index, is excellent at 40.6% vs. 39.8% (we all know where they were one year ago). However, the annualized 3-year performance is .7% and 5-year 2.9%, compared to 28.6% and 25.1% for the Index, respectively. Let me reflect part of a post that I placed in another sandbox last weekend: It is interesting that, while I hear a constant chorus of folks complaining about the market internals, my work shows significant improvement: PERCENTAGE OF STOCKS MAY AUGUST IR Greater than Index 17.5% 27.5% IR Zero to Index 14.8% 31.4% IR Less Than Zero 67.7% 41.1% (May had 6,172 non-foreign Stocks in the universe; whereas, the universe had grown to 6,400 Stocks at the end of August.) The Big Boyz now total 68 companies; however, I'm going to keep my group of 65. In any case the Big Boyz continue to kick butt: (As of 8/31/99) PERFORMANCE INDEX BIG BOYZ YTD 8.3% 15.3% 1 YR 39.8% 59.4% 3 YR 28.6% 40.3% 5 YR 25.1% 34.9% I am concerned about some of the stock valuations. My favorite example is WMT. For the buy and hold types who bought WMT is late 1992/early 1993, it took them 4 1/2 years to get even. In this period of time, WMT was one of only 20% of the S&P companies that managed to increase earnings sequentially each year during the five year period (which makes the love of quarterly earnings reports even more entertaining). The three lessons, I learned from the WMT example are: 1) The Efficient Market Theory is a Joke, 2) When Big Stocks reach an extremely over-valued condition, they tend to go into hibernation, sometimes for years, and 3) Together with Captain Jim's thesis last year, firmly convinced me of the scope of a liquidity driven market in this era of the Index funds. It is important to note that Index funds did not exist in the time of the Father of FA -- Benjamin Graham. I will readily agree with Peter Lynch that, in the long term, all that matters is EPS. The rest of the "stuff" is just noise. Over time, war, peace, rising and falling energy costs and interest rates, inflation, deflation ... matter not. My FA reflects that we came into this year some 20% over-valued. This was principally caused by the Index increase last year on flat EPS. If the Index remains flat for this year, in general, the over- valuation will be corrected with the increase in EPS this year. Note, however, that this would require an 8% decrease between now and the end of the year. Hardly, the end of the world, but I would just assume not participate in this reduction in equity values. <gg> Now, the TA is not so reassuring. Berney

To: dclapp who wrote (26233)	9/18/1999 2:50:00 PM
From: Richard Ruscio	Respond to of 99985

Gotta run ... Here's my reason it's a bull market - if the average stock is down 20+%, and we're past 15 months of that, we're looking for a bottom about now. What bull market ? rr

To: dclapp who wrote (26233)	9/18/1999 6:03:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

Hi doug, my 3500 stock database is calculated into a composite and that composite is only down 2% from the April 98 high and down 9% from the July 99 high. I scratch stocks which are under $ 5, trade less than 30,000 shares on average, and are confirmed to be becoming acquired, merged, or delisted. So far, it's been going sideways since the early August low between the 50- and 200-day moving averages in a similar manner to May-June of this year. Back then, it started to rally when the broad market rallied. As an aside, the advance-decline for the Nasdaq 100 has also been flat since the August low and is still below the August 25 peak and much farther below the July peak. From Thomson's Earnings Report MARKET EARNINGS We continue to roll on toward what will be an excellent reporting season for 3Q99. Estimates are being trimmed, but no more than usual. Over the last three weeks the estimate has only dropped 0.8% to the current 20.6%. It may goes as low 19.0% over the four weeks remaining until the reporting season starts in earnest. It is likely that the final results will beat the estimates by a little more than the 2.6% average of the last five years. Therefore, we continue to believe the final results will be about 22%. Sector leaders in 3Q99 earnings growth show a major shift from 1Q99 and 2Q99. Energy and Financials lead the pack this quarter versus technology and consumer cyclicals last quarter. Estimates continue to climb for energy companies. By 4Q99 the clear leaders in earnings growth will be energy and basic materials (papers, metals, chemicals). thomsoninvest.net