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

To: Lost1 who wrote (4725)	9/28/2001 1:08:13 PM
From: John Pitera	Respond to of 33421

Hi Kirk, this is Don Hay's Monday letter, that Tim had posted...this is more upbeat than Bernie.... ----------------------------------------------------- I think this was from Hay's Monday letter. Psychology: 3 Week – 39 week equity put/call ratio at 20.8% has just triggered one of those very rare, and very accurate long-term buy signals. Equity Put/Call Ratio—15 Day Moving Average moved up to the amazing level of 87.7%, by far the highest in its history. Arms Index—10-day Moving Average for the first time in its history has triggered the above 1.5 level for the third time. The low day on Friday was the 20th day after signal that had been flashed on 8/15/01. Smart Money Index-Very bullish new highs last week There are many more psychology indicators at extremes, but quickly look at the following monetary charts. 10-Year Note/T-bill is been long considered the best economic forecaster of the economy in the next 12 months, and it has just moved to one of its most bullish levels in its history. T-Bill/Discount Rate has dropped back close to the magical –10% level that would indicate another inter-meeting fed funds rate cut. 2-Year Treasury Momentum, MZM, and many more. The time is creeping in, so I can’t mention them all, but to put the cap on all this, the Valuation Composite moved to being 17.6% undervalued stating that stocks are much more attractive than bonds at this juncture. I’m telling you, in every case that this condition comes around the skeptics are saying, but it doesn’t matter this time because “this or that” will happen in the future to distort this valuation reading. I especially want you to look at the overbought/oversold type of indicators: the record-breaking oversold condition of the NYSE McClellan oscillators, my overbought/oversold indicator, and again and again, I could go on and on. All these indicators are at those magical levels that in the past have only occurred at major buy junctures. So my asset allocation is saying that you should be fully invested in stocks to the maximum level that your risk/reward characteristics can stand. We bought stocks yesterday in our managed accounts to push the long-term stock positions in those accounts to 88%, from its previous 77%. To finalize this process, by taking the next step up to the recommended 100%, we are waiting on the bottom-spotting signal to be triggered. This works like this: When a severe decline is reversed by a big, high-volume one day move, you must wait out through the first three days to let the emotional buying run its course. But in that period of the 4th to the 10th day when the major indices move up by 1% on volume that is higher than the volume of the previous day, that triggers a bottom confirmation signal that has been highly reliable at signaling that a significant final bottom has been made. In truth, this is not all that important at this time, but with the intense high fear, I have to admit that this gives just a little more comfort level as to short-term timing.