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Non-Tech : Raptor's Den -- Ignore unavailable to you. Want to Upgrade?

To: sandeep who wrote (3936)	9/30/2002 1:24:26 PM
From: mansan	Read Replies (1) \| Respond to of 10157

Well IMO I don't think anybody should stick to his gun if he/she feels the call is wrong. Flexibility is more important. Who knows, we may see a mini bounce for a couple of days, but the market is still going down. Here is the rest of the comment: <<The Cycles call for the next short-term low near Sept. 27, plus or minus 1 day, so the odds are that will reach some sort of short-term low by Monday or Tuesday. The 5-Day RSI on the Dow closed at 31.71. The 5-Day RSI will normally fall below 30 near a market low, so there is still further downside room for a further decline short term. We normally follow the RSI ,which is our favorite momentum indicator, on a daily and weekly basis for signals. This weekend we decided to look at the RSI on a monthly basis, to see if it agreed about some sort of low in this time frame. The results were somewhat illuminating. We examined each extreme low 5-Month RSI reading on a monthly basis for the last 73 years, since the 1929 high. If the Dow were to close on Monday, the end of September, exactly where it closed on Friday, the 5-Month RSI would be 12.16. That would represent the lowest, most oversold reading of the last 24 years. The only reading near 12.16 in the last 24 years was the 11.06 reading of 1/31/78. That reading occurred 20 trading days before the 3/01/78 Bear Market bottom. If we go all the way back to the 1929 high we find that there have been six extreme low readings in this area The first was a reading of 12.09 on 5/31/32, very close to the current reading. This was 27 trading days before the 7/8/32 Bear Market low, the most important Bear Market low of the last 81 years The next extreme low reading in this area was the 9.14 reading of 3/31/42. This was 19 trading days before the 4/28/42 Bear Market low, the second most important Bear Market low of the last 81 years. The next reading in this same area was the 11.16 reading of 5/31/62. This was 17 trading days before the 6/25/62 Bear Market low. The next reading in this area was the 11.80 reading of 8/31/66. This was 27 trading days before the 10/10/66 Bear Market low. The only extreme low reading over the last 73 years significantly below the current reading was the 6.01 reading of 8/30/74. That reading occurred 24 trading days before the 10/4/74 low of 573 intraday, which was then followed by a rise of over 20% intraday to the 692 high of 11/6/74. This was then followed by a decline to a double bottom of 570 intraday on 12/9/74, the final Bear Market low. If we just take the average time over the last 73 years from the extreme low in the 5-Month RSI in this same area to the final low, we arrive at 22 trading days. Our research on this indicator leaves us somewhat less confident that we are indeed reaching an important bottom in this time frame. In each of the above cases, the final low came in between 17 and 27 trading days after the extreme low in the 5-Month RSI. If the extreme low in the 5-Month RSI occurs here at the end of September, history suggests the final low for this year is most likely by late October to early November. Now this is at odds with the Bradley forecast for a low near Sept. 27, plus or minus 2 trading days, and a rise into late November. It is also at odds with the wave structure, which suggests that the Dow is completing 5 waves down from the 3/08/02 high in this time frame, which suggests that a major rally should follow the low due in this time frame. Still, the history of the 5-Month RSI has a record of accuracy going back over 73 years, and in that time frame there was not one instance of the final low coming in within less than 17 trading days after the low in the 5-Month RSI. Because of the record of the 5-Month RSI, we are going to continue to maintain a very conservative and defensive position on the market a little longer, until we see valid evidence that a low has indeed been seen. We may well decide to raise current long positions by 5 to 10% over the next few days, if the indicators suggest we should. >>