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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Mad2 who wrote (10735)	2/25/2002 3:05:16 AM
From: macavity	Respond to of 19219

A bubble is a bubble. That is all you need to know. After the malinvestment, there is a complete contraction of risk appetite. (Not surprising since all that money was lost). This leads to a lack of (consumer) demand and deflation of once highly valued (overvalued) assets: Real Estate, Shares whatever. When the bubble is sooo big (like Japan and the US) that the numbers involved affect the economy at large then you get a depressed economy - deflation, liquidity traps, consumer aversion to spending. Now that we have had 11 rate cuts, and everyone is discounting their products, or offering 0% finance where are the next set of buyers going to come from. The specifics may be different, but the generalities (as always is the same). Excess one way breeds excess the other. After a 17/18 yr secular bull market we should now expect a 16-18yr secular bear market (effectively sideways). There is a difference though. JGB debt is owned by domestics, while TSY debt has a significant foreign holding. This is why over the past 10 yrs the JPY has remained expensive. Monthly charts of $USD are bullish, but who knows what will happen in 2 years. We will get Bear Market rallies - 50% retracements or even 50% rallies, but only traders (as opposed to BuyAndPray) will make money. Look at the $SPX after the 65-82. plus ca change! -macavity. p.s. this is a long-term view - watch the financials !