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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (45005)	3/28/2002 5:40:21 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 99280

Justa, just like VIX, the absolute number is not of great predictive value, it is the existence or lack thereof of divergences between these number of new highs and the the market' indices. Right now, for the last few days, we have no negative divergence, and that typically means that this strange rally (with no "good bottom") could continue longer. Zeev

To: Justa Werkenstiff who wrote (45005)	3/28/2002 5:54:05 PM
From: westpacific	Read Replies (2) \| Respond to of 99280

18.10 on VIX will be all she wrote, 18.87 today.

To: Justa Werkenstiff who wrote (45005)	3/29/2002 8:27:48 AM
From: Shealtiel	Read Replies (3) \| Respond to of 99280

Why the $COMP/$NDX don't correlate with the NH-NL indicator... Justa, you queried (reply #45005): "... why hasn't the Comp. made new highs in price up to this point to correspond with previous market tops as marked by this measure?" ($NAHL) At the risk of stating the obvious, the NASDAQ small caps are being bought up, but buying has dried up in the NASDAQ large caps. In the current valuation-conscious mentality, fund managers are passing by stocks that were considered "fully valued" at the December/January top (especially those whose CEO's don't see much growth through the end of the year--read MSFT) and snapping up small caps where the leverage from the recovery is anticipated to be higher. Thus, expansion of new highs. Since the $COMP and $NDX are capitalization-weighted, the indices don't reflect this under-the-radar buying. John R.Haley cogently observed (reply #45027): "I might add that the Russell 2000 has exceeded its Jan high and is nearly up to its 52-week high." This phenomenon is more easily observed in the indices representing capitalization cross-sections of the market. As you probably have seen, the strongest S&P index is the S&P 600 Small Cap, which has been setting 52-week highs all month. The next strongest is the S&P 400 Mid Cap, which is right at its May 52-week high and 4% over its January high. Next is the S&P 500, which is down 11% from its May 52-week high and down 2.5% from its January high. The weakest of the lot is the highest capitalization index, the S&P 100, which is down 16% from its May 52-week high and down 3.5% from its January high. The tech-heavy $COMP is worse yet, down 21% from its May 52-week high and down 12% from its January high. But it has a plethora of small cap stocks in it, so it should be expected to outperform the higher capitalization $NDX. As expected, the $NDX is down 29% from its May 52-week high and 16% from its December high. In the same vein as your query, profit_guy wrote (reply #45020): "Why is it that the $BPNDX has fallen so much over the past week or so (from 70 to 55), yet the $BPCOMPQ continues to rise? Even the $BPCOMPQ rose .41 today to close at 54.99, while the BPNDX fell 3.00 to 55.00." The answer is the same: Stocks comprising the more capitalization-concentrated $NDX are not being bought as aggressively as stocks in the broader $COMP. Thus the percentage of stocks with bullish P&F charts is lower for the $NDX than the $COMP. Implicit in Zeev's projection that the $COMP will hit 1930 and possibly approach 2100 is the thesis that the price of the many smaller cap stocks will lead ("stealth rally") the price of the fewer large cap techs, and that the large caps will follow them upward. Whether or not the thesis is sound, I do not know. (As you point out, the tape will tell.) But it is clear that the large caps must get in sync if the projection is to be met. Because if MSFT, INTC, CSCO, ORCL, and DELL don't move up, the $COMP isn't going there. Those five stocks comprise 24.5% of the total $COMP capitalization; and the 50 highest capitalized stocks constitute 50.5% of the 3850-stock composite index.