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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (4573)	8/31/2001 10:14:28 PM
From: Challo Jeregy	Respond to of 33421

Hi John. Saw a couple of things that are apropos with this subject. One problem I have is that "everyone" is looking for that capitulation day. Maybe this thing just slowly trickles down until we get tired of looking for it. comstockfunds.com There Are No Rules!! We understand that the one-day ARMS index just closed over 2 for two days in a row. That statistic has turned Ralph Bloch and other technical analysts very bullish on the market. The ARMS index closing above 2 has happened only eight times in since 1966, and all of them were associated with large gains in the stock market. We also heard a Merrill Lynch executive today state on CNBC that the Economics Dept. at the firm did an in depth study on Federal Reserve easing. They concluded that there were 8 major easings by the Fed and all were followed by the major indices rising about 30% twelve months later (we have some catching up to do this time). Our first thought when we heard this was –wonder how much it cost Merrill to do this study? And the reason we question the cost of the study is because we have charts on our wall which show all the Fed easings with the reaction of the major indices shown right underneath. It is actually pretty easy to do a study such as this and it shouldn’t have taken more than 5 minutes. All the above is accurate---The point we would like to make today is that you have to throw out all the “old” rules. Something just took place that transcends all disciplines, all rules; all of the things that turned prior bear markets into bull markets. The thing that took place is that we had a stock market mania which was unprecedented in all of world history. Don’t you remember when Cisco had the highest capitalization in the world? When Yahoo’s capitalization was worth more than the entire steel industry plus GM, Ford and Chrysler? When Ariba was worth more than either Dupont or Dow Chemical? When Amazon was worth almost any 2 or 3 major “old” economy stocks? When Priceline had a market cap greater than Delta, United, and U.S. Airways combined? When JDS Uniphase ---well you get the point. This whole thing just came to a screeching halt in the first quarter of the year 2000, and unfolded dramatically for the past 17 months. The problem is that the symmetry of this enormous bubble has not come close to unwinding, and will not end until most of the public who participated in the mania eventually swear off stocks forever. Presently, there have been only 3 months of net liquidations in equity related mutual funds. Until there are massive liquidations of these funds forcing the mutual fund portfolio managers to sell stocks in order to meet redemptions, this bear market will only have rallies that should be sold. We also believe the U.S. dollar will come under pressure, as the market continues down, severe enough to force foreign owners of U.S. stocks to eventually capitulate and sell. So, in our opinion, until the participants that caused the bubble capitulate and sell, the bear market will not end. And the problem with staying with the companies that didn’t participate in the bubble is that when the market goes down it takes them all with it. © 2000 Gabelli & Company, Inc. All rights reservered. Member, NASD and SIPC. (FWIW) csf.colorado.edu Wavers. The first chart shows in red the TRIN10 from the 2/6/73 sell signal to its greatest reading of the 73-74 bear market. It shows in green the TRIN10 from the 2/9/00 sell signal until 8/31/01. [Today's green marker is hidden behind some red ones.] The 2000-01 line has been tracking the 1973-74 more or less. I'm not predicting that it will continue to do so. The second chart zooms in on the recent period. You can see that if the current case continues to track the earlier one, even roughly, September would be a negative one for the DJIA. What kind of 1 Day TRIN's might we expect to see if that were to happen? The third chart shows the TRIN1 for the comparable August-October period in 1974. I'll be following the TRIN1 through this September to see how well the current case tracks the earlier one, if at all. Gerald

To: John Pitera who wrote (4573)	9/9/2001 2:58:09 PM
From: Dan Duchardt	Read Replies (2) \| Respond to of 33421

John, All the charts I have looked at agree that "two days above 2" criteria was not met, but in the spirit of "maybe 1.9 is close enough to 2" I looked back for other "near misses". The most recent one I could find was on two consecutive market days 3/9/01 and 3/12/01, about three weeks prior to the April low. I have no idea if that is a repeatable event, but here is a comparison of the TRIN then and the recent near miss. stockcharts.com[l,a]daclyymy[d20010301,20010315][p][vc60] stockcharts.com[l,a]daclyymy[d20010823,20010907][p][vc60] Dan