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Strategies & Market Trends : Take the Money and Run -- Ignore unavailable to you. Want to Upgrade?

To: AugustWest who wrote (8507)	7/15/2002 3:30:17 PM
From: MulhollandDrive	Respond to of 17639

Reuters Company News ANALYSIS-Investors may wait in vain for classic capitulation By Huw Jones LONDON, July 15 (Reuters) - The agonising wait for a big-bang washout in stocks may turn into something like waiting for Godot in Samuel Beckett's play -- it might never arrive. On Monday, European shares sank five percent to autumn 1998 levels after slumping eight percent last week. The selling sparked talk that final capitulation is under way in the market where the last bull throws in the towel. A washout accompanied by heavy volumes can be a signal that a bear market is ending. But just as the two tramps in Beckett's play never saw Godot, analysts warned that stock investors might likewise not see a rapid, massive washout to end the downward trend that began in March 2000. "Some bear markets just end in a whimper," said Ron Daino, global technical analyst at Salomon Smith Barney. Often it is only with much hindsight that the end of a bear market can be traced, Daino said, while others also warned investors about getting hung up on expecting a huge selloff. "Nobody really knows what capitulation means - it's simply a term invented for the media," said stock market historian David Schwartz. "At the end of 1974, our worst bear market ever, it just sort of petered out. We are however seeing a lot of frightened people selling out and walking away from shares, which often signals a market bottom." Monday's broad rout was a continuation of the selling seen since March when a post-September 11 recovery began to falter. The selling has accelerated in recent weeks as profit hopes dim and U.S. accountancy scandals mount. The deepening woes of the dollar also added to Monday's stocks slide. Chartists who predict market trends based on graphs believe there is more downside to come. "This is the third (major) bear market of the century and right now we don't think it's over with yet," said Ron Daino, global technical analyst at Salomon Smith Barney in New York. The downside could be considerable. "This bear market has probably another four to five months to go and substantial downside," said Chris Chaitow, a chartist at Collins Stewart broker in London. European stock benchmarks could fall another 25 percent before they form a base, Chaitow said. "It's been a vicious bear market on the way down and it's still in full flood. There are a lot of companies in serious trouble." European shares are headed for their third down year in a row. The pan-European blue chip FTSE Eurotop 300 index (^FTEU3 - News) is down by a quarter for the year. FOLLOWING WALL STREET Europe's big selloff on Monday was worse than Wall Street's losses, but analysts said bourses were moving in line with critical chart levels already hit in New York last week. The U.S. broad market benchmark S&P 500 index (CBOE:^SPX - News) was singled out as having a key influence on European indices. The index, one of the most widely followed by fund managers, last week sank below a key 965 point line in a chart formation known as a head and shoulders. The move triggered similar formations to be broken in Europe on Monday, Salomon Smith Barney's Daino said. As Europe closed, the S&P 500 index was trading at 893 points, a level last seen in 1997, and chartists see a downside of 800 points and below. There was one crumb of comfort for investors as the selloff picked up on Monday. "The faster it falls, the better it is," said Mark Glowrey, a chartist at StockCube, adding that a rapid washout would help avoid a long, drawn-out bottoming process for the market as was seen in Japan. "It's getting close to capitulation but it's not clearly that as yet," Glowrey said. Heavier trading volumes were needed to accompany very sharp, downward moves to form a true washout, he said. Salomon Smith Barney's Daino said capitulation was already taking place on a stock by stock basis in Europe, but that a rapid and deep washout may not happen for the market overall.