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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: augieboo who wrote (17941)	12/2/2002 11:32:20 AM
From: pvz	Read Replies (1) \| Respond to of 23153

Thanks, it is working now. By the way, I wanted to compliment you on your ihub compx charts. pvz

To: augieboo who wrote (17941)	12/2/2002 1:22:56 PM
From: kodiak_bull	Read Replies (2) \| Respond to of 23153

Augie, I'm curious about the Measure Rule on your chart. I don't know where the bottom is going to be on the SPX (or, maybe I know, but I'm not telling?) but if you look at your chart and the Measure Rule, you come to the conclusion that a huge retrace like that would take about 2 years to accomplish (assuming things don't just fall off a cliff tomorrow). My own view says that, with other variables at work, charts tend to continue toward the northeast corner as they march from left to right, and that they tend to rise. A SPX at 350, assuming we revert to a 1995 or so normalized SPX p/e of 20 (off as reported earnings) means that earnings would have to drop from current earnings (6/30/02) of 27 to about 17. To put that into perspective, those would be the lowest earnings by about 1/3 since 1996, and close to the lowest p/e. It seems more likely to me, in a very low interest rate environment, that we will stay at valuations in a band closer to where we are today, and that SPX earnings will stay in a similar band. With very low yields from money markets and bonds (and likely capital disasters for people who buy bonds and bond funds at these historically low rates), folks will pay up in high p/e (or no p/e) for a chance to do better. Those savvy (and brave) enough to buy AMD a few weeks ago at $3.00~ and negative earnings are rewarded today with a triple; obviously better than what Joe Sixpack got in the same time frame with a bond fund. So call it SPX reported earnings somewhere between 20 and 30, and valuation in the market at somewhere between 25 and 35, which gives you an SPX between 500 and 1050. The more important number, to me, is the bottom one, the 500 as close to the bottom as we can expect.