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

To: Les H who wrote (27544)	9/28/1999 12:33:00 AM
From: bobby beara	Respond to of 99985

quote.yahoo.com^N225&d=my The n225 is finding resistance along the trendline from the 89 high and the 96 high. There is a biiiigg inverted H&S pattern that failed in 97 and then we went into the Asia crises, they are recovering tonight so the retest of this current inverted H&S pattern may be valid, which will further strengthen the yen. There is also a 3 drives to a bottom pattern bwdik

To: Les H who wrote (27544)	9/28/1999 1:27:00 PM
From: Les H	Respond to of 99985

A Crash Course by Trevor Webster thisislondon.co.uk THE PROPHETS of Doom are out in force this autumn. They are sounding chilling warnings that world stock markets are seriously overvalued and are set for an October crash. Eddie George, Governor of the Bank of England, was one siren voice highlighting the dangerous level of global stock markets this month. His Bank colleague, Sushil Wadhwani, struck a similar note, claiming that the market was approaching 'the last-chance saloon' because the gap between the yield on shares and Government stocks is too big for comfort. The September Economic Review from Lombard Street Research, headed by Professor Tim Congdon, has gone even further in the shudder stakes. It says all the conventional yardsticks for measuring share values - dividend yields, price-earnings ratios and bond-yield ratios suggest Wall Street is heading for 'a big fall' and it will take a drop of 30% to 60% to restore normal valuations. It also pinpoints October as the likely time, since the Great Crash of 1929 took place in October and so did the 1987 crash, which wiped 40% off share prices in two days. As if fulfilling these prophecies, the Footsie index has already tumbled 10% from its all-time peak in July. The worst drop came last week after the US suffered a record trade deficit and the dollar weakened. Wall Street analysts forecast further rises in American interest rates and more falls on the stock market. It sounds as if a horror film is about to burst on our screens and small investors can be forgiven for feeling unnerved by forecasts of falls of this kind. They know the market has been rising for years and must face a sizeable correction some time. Is it time to panic, sell everything and head for the hills? Only if they have to cash in their chips now. Not if they are serious long-term investors. The bears may sound convincing, but the worst may already be past. This is more a time to reflect on the state of the stock market and the worth of the soothsayers. First, the bad news. The American stock market is the Doomsday Machine, which triggers off all global stock market crashes, and our stock market can never escape unscathed from any big fall on Wall Street, if only because many British giants such as Glaxo Wellcome, Shell, BP Amoco, Vodafone, HSBC and British Telecom are quoted on both markets. Wall Street does look seriously overvalued, with leading shares in the Dow Industrial Average selling on a price-earnings multiple of 29 and Standard & Poor's index on a heady 39. The good news is that there are long odds against a crash next month. Wall Street has looked overvalued for at least three years and, like all good bull markets, has gone on 'climbing a wall of worry', as if investors have adjusted to new values in a period of unprecedented growth and low inflation. It survived autumn setbacks in 1997 and 1998. The British market has followed, but much more cautiously. The Footsie is around the level at which it started the year, well below its 1998 peak, and the average price-earnings multiple here is nothing like as stretched as in America. It ranges from 19 on the second-line Footsie 250 to 22 on the Small Cap and 27 on the Footsie 100. It is a myth that October is bad for stock markets. Although the 1929 and 1987 crashes are associated with the month, the biggest crash in post-war Britain in 1973-74, which wiped nearly 80% off shares, began in the spring and stretched over nearly two years. October is more a time for buying. It is usually a good month for shares, when they start to reverse the seasonal losses of May to September. Stock market historian David Schwartz, says that during the past 20 years returns on investments made between October and December have averaged 13.5% during the winter months, whereas 'investors lose money in May and June with astonishing regularity'. Over the past 80 years October has shown an average rise in shares of 1% and they have also risen on average in every winter month through to April 1990. If a crash should come next month, investors should focus on income and remember that the long-term trend is their friend. Dividends account for two-thirds of the total return on shares over long periods and invariably go up, even when profits are falling. Companies call on reserves from past earnings. That is why insurance companies project average growth of 7% for endowment policies and pensions. Over the long run shares reflect that growth and also rise, taking short-term blips in their stride. Investors who feel the need for comfort over the next month should bear in mind that shares have risen fivefold in the past 15 years, tripled in the past 10 and doubled in the past five. Shares suffer an annual fall only about once in 10 years and it has already happened twice in the 1990s. In 1987, which most small investors remember as their 'Great Crash', shares still rose over the year and the big losses of October were completely recovered two years later. The 1987 crash now looks like a tiny blip on a long-term chart. The 1973-74 crash was much more serious and yet the stock market again recovered all the lost ground over the following two or three years. Like 1987, it was a great buying opportunity. Associated British Foods shares have soared from only 20p in 1974 to a high of 568 1/2p earlier this year. Barclays have climbed from 106p and have since been more than œ20. British Land, then 4p, have since topped 500p. BOC were 15p and are now close to 1300p. Hepworth is up from 8 1/2p to more than 200p. GEC was 45p and is now nearly 600p. Imperial Tobacco has risen from 32p to 697p, Grand Metropolitan (now Diageo) from 22p to 632p and Granada from 19p to 560p. These figures sharply understate the subsequent gains because they are not adjusted for scrip issues and share splits. However, they should make comforting reading if the stock market suffers a hiccup or two over the next month.