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

To: Lee Lichterman III who wrote (32030)	11/1/1999 10:36:00 AM
From: Les H	Respond to of 99985

re: Nasdaq, Dow You still have a potential non-confirm in the DJTA and DJUA, especially if the DJUA slips back below the prior reaction high and pull back is deeper. The DJTA was turned back on Friday at the prior reaction high in the "W" bottom and starting to look like a "VVV" bottom.

To: Lee Lichterman III who wrote (32030)	11/1/1999 10:52:00 AM
From: pater tenebrarum	Read Replies (3) \| Respond to of 99985

Lee, it is a well-documented fact that as an investment mania progresses, fundamentals begin to count for less and less. it's as if the market that is in the mania's grip becomes a closed system with it's own dynamic. this is one of the reasons why manias end badly...in the end, the market tends to catch up with the deterioration in the fundamental backdrop in a very short period of time, as if all the participants realized all at once that the fundamentals are not supportive of prices anymore. a great illustration of this principle is the Japanese stock market mania of the late eighties...in '89 the market continued it's relentless march upward in spite of sharply rising interest rates and valuations that were far removed from reality. the belief in the Japanese miracle economy was so strong that it overrode all other considerations. i remember very well that it was conventional wisdom at the time that Japanese stocks deserved higher multiples because of different accounting standards, their superior managements, and other rationalizations, for instance one that held that it was a sort of far eastern cultural thing to value stocks so highly. although i have also turned medium term bullish on the U.S. market now, i have no doubt that ultimately the same will happen here...after a relentless march upward that will basically wipe out all or most of the shorts, all the rationalizations will one day come to naught. and in hindsight, even A.G. will realize that it WAS a bubble after all.... regards, hb