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

To: Psycho-Social who wrote (71219)	3/4/2001 9:08:24 PM
From: jmootx	Read Replies (5) \| Respond to of 99985

I will repeat why a strong bounce is going to happen this month 1973-74; 1930-1932 did not see 'capitulation' For those looking for a high volume, high point capitulation day---not found at the bottom of the 1973-74 market. Matter of fact that bottom was a double bottom, the first v had standard volume and the second had lower volume. Also looking back to the worst slide--1931-32, every leg down was met by 46-47% retracement or better before the next leg down. Again, no major capitulation. So capitulation is not a function of major bear markets in US history, but instead, minor troughs like the ones seen in 1987, 1990, and 1998. Instead, bear markets are exhaustion runs that finally see the 'hare' slow down and go to sleep and the 'tortouse' finally catches up once valuations match the low expectations. Even if everyone 'thinks' PE's should be 10-17: Simply not going to happen tomorrow. The market is done 'crashing'. Not to say NDX won't retest---but multi-year trading ranges will eventually absorb those high PE's. In other words, I could see the NDX trading between 1800 and 2700-3000 for as many as 7 years. That is exactly what happened after the 1973-74 crash--the Dow traded between 550-1000 for seven years. The Nikkei is just now hitting 15 year lows nearly 12 years after the crash there. It was at 19000 last Fall. And Japan has/had many more fundamental problems than us--real estate problems, banking crises, and the like. Even in the worst case scenario for the US--like the 1929-1932, It took over three years to retrace 90%---and the NDX hit 65% gone in under 12 months. Learn to simply mark your spots and trade this devil for several more years. Mark my words a good bear rally is about to start Technically we are as oversold now as over bought at the peak last March. Basing only on standard deviations of the NASDAQ from its 200ma. The ma is nearly in the same place now as then, after putting in a curl and now declining. The index was 35% above the average at its peak, and is now only 36% of the average. To bet that any more bad news will send this lower in the short term is a bad bet IMO. Did anyone notice how the IBM rumor really pumped the market??? A little no nothing rumor--when huge real news like AMCC and ORCL is around. It won't take much to turn this story around--Dick McCabe saw what I saw on the stochastic oversold and he is pushing for a March-April rally to about 3000---so if Merryl Lynch is ready to trade long---they will drum up something better than the IBM rumor or wayne Angel to get there....Just the way it is. Go short late April. Went back to 1929 on the Dow and measured a 59% decline--got me to 12/17/1930, about 14 months after the peak. there once again the Dow sat at the same percentage lower of the 200 day average as the NASDAQ today. And it rallied 48% of the deficit--or about 24%. That is about right as I see on NASDAQ--rally to 2500-2600. Remember the Dow went on to decline a total of 90%---so many of you need to realize even in the worst case scenario, it will not just go straight down without very tradeable rallies.

To: Psycho-Social who wrote (71219)	3/4/2001 9:40:20 PM
From: Shack	Read Replies (1) \| Respond to of 99985

I admire your methodical approach with these indicators. If you have found 10 years of reliable correlation with your indicators and the S&P, I would hesitate to question your conclusions. I guess the only thing that might derail this relationship is if these indicators suddenly change their extreme thresholds in secular bears (assuming we are entering one as I do). This would be the "underlying negative force" as you put it. A secular bear would likely produce different relationships than this 10 year slab: stockcharts.com[w,a]maclyimy[pb10!b20!b50!b200][vc60][iUc20!La12,26,9!Lf!Lh4,3] In terms of my 100% short position, I chalk that up to a cycle turn which isn't due to arrive until next week. We are indeed approaching a buyable low and I will be covering these positions over the next week in anticipation. Interestingly (or not), I am not carrying any tech shorts as I am starting to see some slight positive divergences in the accumulation indicators on the COMPQ. I have already taken all my profits there and have rolled into shorts in the other sectors. Cheers Shack