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Non-Tech : Dorsey Wright & Associates. Point and Figure -- Ignore unavailable to you. Want to Upgrade?

To: Tommy Dorsey who wrote (7047)	4/21/2000 8:07:00 AM
From: Dave Shares	Read Replies (4) \| Respond to of 9427

A novice piffer looks at the market Several weeks ago, I made the following post regarding the fact that historically, the NYSEBP has rarely failed to make a buy signal at a low level within a certain number of columns. I expressed concern about this, as I felt this was something to watch and to maintain caution over, as a reversal in NYSEBP back to Os would not be good. Message 13320281 Well, wouldn't you know it, soon after this post the NYSEBP added an X and gave a buy signal. I did not take the buy signal, because I still had a nervous feeling and of course, the outlook on Nasdaq has remained bleak before and after this previous post I made. But now, with a reversal in the NYSEBP back to Os, I decided to get out my book again and look at the historical charts of the NYSEBP. I can't draw P&F charts here like the others, so please bear with my descriptive analysis. When the NYSEBP gave the buy signal, it did so with a column of Xs that exceeds the previous columns of Xs by 1, and now has reversed. My experience with the NYSEBP has been that the moves in either direction are usually not so constrained, in other words, when there is a buy signal, there is a decisive move up over the short/long term. I do not like it when a stock gives a buy signal 1 X above the last X column and then reverses, and I don't think I like what I am seeing here. Well I have looked at the book, and at the web site, and I wanted to see when we have seen such a limited buy signal in the past (only 1 X above previous X column) My findings are as follows: Date NYSEBP Level at Buy Signal 12/93 68 10/73 62 12/68 78 01/66 76 The book goes back to 1954. So, have we ever seen such a constrained move at this relatively low level, the answer is that I don't see it ever having happened. If you look at these other time periods, the ultimate reversals that followed were not pretty, but as they came at overbought levels, this is not surprising. The other technical factor that gives me pause about taking any long positions in this market is the narrow movement of the NYSEBP in the 32-42 range. If you look at the historical charts, this kind of pattern is not seen. I have to go back to 1960 to see three consecutive columns that did not exceed 6 high. I truly do not know what to make of this, but I personally take this with total caution. One can talk about the limited risk at NYSEBP=37, but the last I looked, the bottom of the chart still equals 0. It reminds me about times when I was less knowledgeable, and I would ask a co-worker about a stock trading at 10 that had been at 80, and I would say, "look at all the upside potential, and the the stock is at the bottom of the chart", and the co-worker would say to me, "the chart you are looking at has the bottom at 10, but the true potential bottom of any stock is 0, so be careful" As we approach a cross current here, between the seasonally weak period of the market, and the historically strong pre-election cycle, I feel no urge to take any long term positions at this time, mutual fund managers may need to stay invested, but I do not. All the great teachers, including you Tom, have emphasized capital protection. No lesson has more importance. A stock with RS = X performs at least as well as the market, but is not immune to market weakness. Best wishes always, David