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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: stockman_scott who wrote (6813)	9/20/2002 11:52:02 AM
From: lurqer	Respond to of 89467

Cracking dem Bonz Triple witch musings – the coming year. I’ve seen some arguments maintaining that we’ve seen the lows for this bear market in July. In fact just saw another one on CNBC yesterday. Among the reasons given is there’s no one left to sell. According to this idea all of the LTB&H crowd have given up or been wiped out. Since no one is left to sell, the markets have bottomed and although we may dip again the results will be higher lows. Whoa. Go back and look at those July lows again. I’ll grant that July largely obliterated the individual bullish investor. After fighting the bear for over two years, there are very few individual bulls left. But that ‘s just the soft part of the Great Bull stampede. There still a lot of bones. The Great Bear predator in July got its first taste of bone marrow with the mutual fund redemptions that occurred then. For the first time those redemptions reach significant levels. Now that the bear has tasted marrow, I doubt that it is satisfied. Remember that not only did the 2000 Bull lure in a lot of individual investors, but the mutual fund business had its own bubble. The boomers have yet to retire, and the is still a lot of 401K money in mutual funds. Granted, not nearly as much as there once was, but a lot has not been withdrawn…yet. While some funds are gone ( usatoday.com ), those mutual funds are the still largely intact bones of the bull. And I believe they will be the next target of the bear. There’s a very real possibility that the bear will dine (not just taste) on its first meal of marrow this fall. If the Naz falls below the July lows to say the 1000 level with many mutual funds at currently reported low cash levels, a bear marrow feast will ensue. Already we have redemptions - Message 18012760 ; I believe we get a flood at Naz 1000. Now Naz 1000 is an interesting level and a good one for a bounce. But again I would expect only a bounce. There are just too many bones. So after its first marrow meal this fall, the bear may hibernate for awhile until early next year. Then “good ‘n’ hungry” it’ll be ready to gorge itself --> another dip to Naz 750. Satiated, the bear will allow a market bounce. But come the fall another meal is likely. This time with most of the bones gone, the Naz may only get to 900. Then, with no more bones the market bear may leave us alone - for a few years. Several ideas feed the above scenario – current P/E values, demographics, etc., but the principal driver is an analysis of market bubbles. One of the problems with this kind of top down scenario building is to get some good numbers as pivot points. I tried to incorporate some Fibonacci analysis, but it was all ad hoc and contrived. So I decided to leave it out and just use round number “ballpark” guesstimates. The exact pivot numbers should be gleaned from standard indicators (sentiment, chart formations, etc) at the time anyway. Is the scenario right ? Who knows? Not me. I use scenarios as prospective guides for possible market moves. That gives me a framework within which to formulate trades. If the market follows the “guide”, great I make money. If it doesn’t and the trade is good, I still make money – just less. If the trade is bad, there’s always a stop. As for this scenario – we’ll see. Don’t be surprised if you see a revision (or two<g>). As a side note given some of the “proclivities” of this board, this scenario would provide a bullish backdrop for gold. lurqer