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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: KyrosL who wrote (3469)	5/6/2001 10:07:57 AM
From: westpacific	Respond to of 74559

11,000 has to be broken first, no one can call when this current rally will turn. Do people not accept we are like 800 points away from an all time high on the DOW - and yet all news is negative. All this talk of factoring in 6 months out is all Wall Street pump machine. Do not forget all those that write or talk on TV have an interest in seeing this market higher. Their jobs depend on it. A simple fact many Americans choose to accept as they are also praying for their at-risk capital to go higher. On hope and a prayer. Nobody can predict this economy 6 months out - not when it is driven by consumer spending. So remember that - and do not forget the rule: Pigs get slaughtered, do not get too greedy. West

To: KyrosL who wrote (3469)	5/6/2001 10:44:04 AM
From: Crimson Ghost	Read Replies (1) \| Respond to of 74559

I would not count on this rally continuing for more than a few days. The AAII and Consensus sentiment surveys show extraordinarily high bullish readings. The bottom may well be in, but we are due for a hell of a correction very soon. Also note the following: May 6, 2001 Strategies: In a Bull Stampede, They Hear the Bears' Growl By MARK HULBERT he bear market is not over, despite the impressive recent rally that has sent the Nasdaq composite surging by almost 34 percent since early April. That is the current argument of many contrarian analysts, who try to time the market by interpreting investor psychology. They call the April gain a bear-market rally, and they say we have yet to see the kinds of behavior that historically have been the hallmarks of major market bottoms. This psychological perspective is called contrarian analysis, because the market typically does what is contrary to the beliefs of the majority of investors. In other words, bull markets like to climb a wall of worry; they near their end when the vast majority of investors have overcome their skepticism and jumped aboard. By contrast, bear markets thrive when the prevailing mood is hope, and do not end until dejection and despair displace it. To be sure, contrarian analysis is as much art as science. No single barometer can tell exactly what the average investor is thinking and feeling. And even though the market typically frustrates the majority, there is no guarantee that it will always do so. Nevertheless, one gauge has proved as good as any over the years in judging investor psychology: the market sentiment of investment newsletter editors. They are extremely sensitive to changes in how the wind is blowing — and are not above changing their tunes accordingly. If greed rather than fear is predominant among investors, for example, then a significant number of newsletter editors will start catering to that greed, even if they personally are worried about the risks. These days, the consensus among such editors is quite cheerful, based on a review of the market outlooks of the 160 or so newsletters monitored by The Hulbert Financial Digest. During April, the editors of these newsletters were incredibly quick as a group to return to the bullish camp. But from a contrarian point of view, that is a bearish sign. Consider the average recommended equity exposure among a particularly hyperactive group of these editors — those who update their advice daily by Internet or telephone hotlines — and who shift much or all of their portfolio into or out of equities when they change their minds. Their exposure to stocks is now 63 percent, up from just 2 percent as recently as April 4. The increase was even sharper among newsletters that focus on timing the Nasdaq composite. The average exposure among that group is now 36 percent, up more than 100 percentage points from an April 10 reading of minus 85 percent. (The negative reading reflected heavy exposure to the short side of the Nasdaq market.) The recent behavior of newsletter editors stands in stark contrast to what they did after previous major bear-market bottoms. They reacted with disbelief, for example, when the market rallied off what turned out to be the market low in December 1974. Instead of quickly becoming bullish, the typical newsletter editor believed the rally to be a bear-market trap. As a result, these editors therefore helped form the wall of worry that was the foundation for an incredible bull market. The editors' recent actions are more reminiscent of what they did, on average, after bear-market rallies throughout 1973 and 1974. In the wake of each such rally, many editors were quick to declare that the bear market was over. They were seduced into increasing their equity exposure just in time for the bear market to resume. After successive losses, these editors finally threw in the towel, declaring in effect that a rally would never again sway them into believing that a bull market had begun. That turned out to be the final low. To put the contrarian argument more succinctly: if the stock market did reach an enduring low in late March and early April, it would be the first time such a trough was recognized almost immediately by the majority of newsletter editors. Do you really want to be making that bet?