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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (258730)	9/3/2003 7:31:31 PM
From: Box-By-The-Riviera™	Read Replies (1) \| Respond to of 436258

hmmm.. okay i'll post the exerpt and everyone can decide for themselves... pass me some o dat bord-o. September 3, 2003 -- Let's start with an e-mail received this morning from a lady subscriber. Richard, You said last year that there would possibly be as much as a two-year up leg in the market that would suck in investors before turning down much lower. Is this it? KB Russell Answer -- Yes, I believe that what we're experiencing is an extended up-leg or large secondary correction in an ongoing bear market. The main reason I say this is because the very basis of Dow Theory revolves around VALUES, and since this bear market started we've never seen anything remotely resembling great values in stocks. Subscribers might review the "Four Great Calls" section on the home page of this site, and you'll note that the KEY element of every bear market bottom has been great values. (If you're having trouble finding that section on our home page, you need to hit your refresh button since this section was added recently, and you may have book-marked our website at an earlier time.) Talk about fabulous values, at the 1974 bear market lows the Dow was selling at 6 times earnings while yielding 6.36%. In other words, the Dow P/E was actually below the Dow yield. Those were true bear market bottom statistics. Compare that with the lows of October, 2002, at which time the Dow was selling at 19.71 times earnings while yielding 2.49%. At the same time the S&P was selling at 29.95 times earning while yielding 1.98%. And you can say that the market is even more flagrantly overvalued here in 2003, since the Dow today is selling at 21.22 time earnings while yielding 2.16%, while at the same time the S&P is selling at 33.25 times earnings while yielding 1.75%. As I'm writing this I just got a phone call from my friend, Bob Pisani (a serious market student) from CNBC. Bob asked, "What's going on?" I answered, "We're in a most unusual situation, even an unprecedented situation. Yesterday the Dow closed above 9504. The 9504 level was the halfway level of the entire bear market decline of Dow 11722 to Dow 7286. The halfway level was 9504. According to the 50% Principle, when, following an extended (in both duration and extent) decline, the Dow recovers better than half its losses, then the market-seesaw tips to the upside, and the Dow may rise well into the upper half of its bear market area. In plainer words, if the Dow can hold above 9504 and push substantially away from this area, the way is open for the Dow to at least try to attack the old highs. What's so unusual about this situation aside from the extreme overvaluation? It's this -- the rise has been generated by the Fed's unprecedented battle against the normal forces of correction, following the top-out of the bull market. Instead of allowing the bear market to correct the excesses of the bull market, the Fed has decided to fight the bear "tooth and nail." The Fed has obviously taken to heart what I've predicted all along. The critical choice the Fed must make is -- "INFLATE OR DIE." etc etc etc of course he didn't predict that all along. we did right here two years before he ever mentioned it. HO HO HO. i use we loosely. heinz and many others did.