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Strategies & Market Trends : market dissection: all methods considered... -- Ignore unavailable to you. Want to Upgrade?

To: eichler who wrote (73)	8/28/2001 5:28:28 PM
From: Jeff Jordan	Read Replies (1) \| Respond to of 450

I like a thread with charts! Yes today's Nasdaq close is troubling. Bearish candles. investorshub.com

To: eichler who wrote (73)	8/28/2001 6:06:30 PM
From: eichler	Respond to of 450

An interesting article posted on the Dr. Bob thread... Message 16271236 Tedious, but interesting... A couple of excerpts: <Most people are aware that the market has historically rallied following every post 1930 rate cut cycle in history.> Maybe this bear has more bite than the bears which followed the '29 bust...it was not long ago when the writers were pointing out that every time the Fed has lowered 4 successive occasions, the markets responded.... Fed has exceeded 4 cuts and the market is still voting "too little, too late" and "why the heck did ya have to raise 'em first again, anyway?" At this point, that argument holds no more water. Done. < If investors decide to withdraw some of the trillions held in CDs, savings accounts and money market funds, this often indicates that they are leaning toward the market.> The prevailing perception NOW is that the markets are still overvalued in spite of a major haircut. Also, that the markets are currently very dangerous. Another poor argument. <Despite the loss of stock market wealth, which occurred over the last twelve months, there is more than enough cash held in money market funds to fuel a strong rally.> But is the investor very willing now to swim with the sharks? This "so much cash on the sidelines" argument is getting very, very old...... <Many of the indicators that market technicians use are telling us that the markets are oversold. The TRIN, or Arms Index, which is a highly accurate market indicator, showed a 10 day moving average of 1.5, which has signaled that a strong rally could ensue. The volatility indexes, and the put/call ratio all reached high levels this week. Yet, the markets can remain oversold until buyers come in.> Just put an underline on that last sentence....... <Some investors think the S & P 500 and Nasdaq are still overvalued because the P/E of the stocks in these indexes are high by historical standards. However, comparing the P/E of a stock to the typical P/E of a stock 10 or 20 years ago does not always give viable results. The primary factors which contribute to corporate profits and stock market gains are free cash flow and return on equity. The return on equity of the companies in the S & P 500 is currently averaging 20%, versus the average of 10% in 1980.> Completely ignored is the fact that low average PE's before or during the early stages of the greatest bull run in history are being compared to a period when the bull is currently being harvested by the bear. Could we not now have a greatest bear run after the greatest bull run? Just doesn't sound like a fair comparison. Overall, this sounds like a floundering attempt to muster bullish sentiment. I'm guessing more takers for haircuts are desperately needed. Still, very interesting to read and consider.....IMO