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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (14853)	4/21/2001 11:25:07 AM
From: Zeev Hed	Respond to of 30051

ajtj, you really have to look at the long term "theme" of the turnips scenario to get an insight into their medium term forecast. Th long term theme involve a lengthy period paralleling the 1966 to 1982 market in which we were "range bound" (on the Dow) between 500 to 1000. The current period, which I "start" sometime in 1998, may not be that long (at the time I had 7 to 10 years), so now we have 4 to 7 years left in that period. One of the leading rationale is the long term historical valuation of stocks ranging from desperation under valuation with PE's under 10 to excessive exuberance with general market PE above 25 (we got into the mid 30' on the S&P at the height of the exuberance mania). That general scenario assumes that over time, stocks are going to be a a plurality of cyclical bear and bull markets until earnings catch up with valuations. As for the intermediate term, it is more under the influence of expectations for the next 12 months rather than actual GDP results. The reason the model is uncertain as to whether we get our final bottom in August or in October, is related to outstanding taxation issues not yet resolved. These very broad events are then modified with detailed temporal analysis of recent historical stock action. One example of potential influence on future price action may indeed be, as you mentioned, "tax selling" by the funds in October. My model does not have that element as a major influence, but it has rising expectations of a very strong Christmas and first quarter in corporate earnings starting early in October. Thus, if we indeed make a second bottom in October (after the expected August lows), I would expect it to be concentrated around the beginning of the month, like the period between October 3/10. Funds tax selling would put the potential October lows late in the month, if memory serves. Of course, it is much too early to even look at that time period, but on the other hand, it is only six months away. Zeev