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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (51346)	3/22/2004 4:29:28 PM
From: MulhollandDrive	Respond to of 57110

hussmanfunds.com <snip> Though I believe that bull and bear markets exist only in hindsight (not in observable experience), we can indeed look back in hindsight and examine their characteristics. What is immediately notable is that past bull markets historically began with prices at less than 9 times prior peak earnings, on average; that most began at less than the historical median of 11 times prior peak earnings; and that none began at a multiple above the historical average of 14. That is, except the advance that began in October 2002. The current advance does not have the valuation earmarks of typical bull markets. Nor, as I have noted before, does the current economic expansion, which began not from a current account surplus as past expansions have, but with the deepest current account deficit on record. As such, this advance is also unlikely to end like typical bull markets end. It will most probably end (and may in fact be ending) like most “bear market corrections” end – with an abrupt “reversal” in market breadth rather than a gradual and prolonged flattening in the advance-decline line. While our own measures of market action remain tenuously – and I stress tenuously – favorable, I noted last week that Dow Theory has already pronounced a new bear market, based on Richard Russell's authoritative interpretation of the theory (Dow Theory Letters). Despite my aversion to classifying market movements in “bull/bear” terms, Russell's views on this reversal are interesting: “What we're seeing is the death of an upward correction in a primary bear market, and this may be why the ‘normal' market top statistics (persistent weakness in the advance-decline line, weakness in interest-sensitive securities like bonds and utilities, expanding selling pressure in the Lowry's statistics) have been absent.”