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To: chic_hearne who wrote (53869)	1/4/2001 2:01:21 AM
From: Perspective	Respond to of 436258

I was looking for an intermediate bottom around 2200, as you quoted. However, given no evidence of any degree of panic, I hadn't fully covered. I believe there are two excellent models for what may be happening. The most recent is obviously Japan in the 1990s, and the other is the US 1930s. I now favor the idea that the liquidity trap is set, and no amount of ease can rescue the market from its own mistakes. This should produce something resembling the two aforementioned scenarios. In both cases, a significant bear market rally materialized some nine months after the market top; it lasted six months in Japan, but only a couple months in the US 1930. I think the key is how quickly the underlying fundamentals deteriorate, and how dependent the economy is on the bubble mechanics. Our fundamentals are deteriorating quickly, and unlike the 1930s or 1990 in Japan, we have yet to even approach levels that represent rational valuations for stocks, Naz or S&P. In both quoted cases, the indicies made the ultimate lows of the first bear market some 2 1/2 years after the bubble peak. And, in both cases, trading became extremely choppy and volatile for the next decade. In Japan, the ultimate low wasn't made until several years later (maybe hasn't yet been made?), while the speed and severity of the 1930s collapse permitted that low to be the ultimate low. I think our Fed will fight this to the death, meaning a lengthy, painful decade will likely result, more like the Japan scenario. My scenario would be a six month rally (will feel more like sideways) to be rejected at Naz 3000, followed by another year-long bear grinding down to Naz 1500 in the middle of 2002. A brief bull would then appear, carrying back to Naz 2200, but then another severe bear would take things back down to Naz 1100. That said, my gut tells me this economy is disintegrating with unprecedented haste, so I'm not ruling out a 1930s style wipeout. BC