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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (73028)	3/5/2007 12:32:29 AM
From: Mick Mørmøny	Read Replies (1) \| Respond to of 306849

Get Well, but Not Too Quickly By CONRAD DE AENLLE Published: March 4, 2007 MANY investors will be looking for a quick recovery in the stock market this week, but such a rebound might do more harm than good over the long run, one analyst warns. “The best-case scenario would not be for the market to run up again,” said Louise Yamada, head of Louise Yamada Technical Research Advisors, but rather “to consolidate sideways for an extended period.” She reasons that if stocks snap back to their old highs, it might provide an excuse for relieved shareholders to bail out. “If you run right up again after a severe correction, it encourages people to sell into the rally,” she explained. “It’s better to see accumulation at lower levels than another spike and more profit-taking.” Ms. Yamada is a technical analyst, one of a breed on Wall Street who do not spend much time scouring economic or corporate fundamentals to try to attach meaning to what is happening in the stock market. Instead, technicians examine trading patterns for clues about the market’s next move, whatever the cause. Ms. Yamada said it was “too soon to declare bull or bear,” but she found a lot not to like in the 416-point decline on Tuesday in the Dow Jones industrial average. It occurred on record trading volume, showing concerted selling, not just an absence of buyers. The 100-to-1 ratio of volume in declining stocks over advancing stocks, the most lopsided margin ever, including the day of the 1987 crash, was also disturbing. “There has definitely been some technical damage done,” she said. “It will take weeks to be able to see in the chart patterns whether there is repair or more risk of distribution,” meaning further selling. The first signs of repair this week could come from “evidence of demand,” like more stocks advancing than declining, even in a flat market, and modestly greater volume in advancing stocks than declining stocks. That would help to convince her that there is “calming and stabilization taking place.” The most unsettling development, from her standpoint, would be an immediate recovery, then a fall beneath the lows of last week, just above 12,000 on the Dow and 1,380 on the Standard & Poor’s 500-stock index. “That’s the safety net; you don’t want to come below the first low,” Ms. Yamada said, reciting a tenet of technical analysis. Putting recent trading into perspective, she noted that the decline had yet to reach 10 percent, which would make it a correction, and that the market was still well ahead of where it was last summer. Even so, she could not help asking what stocks had done for her lately. “People have had a lovely eight-month ride, but I would like to see 12,000 hold,” she said. “I’m not sure it’s going to.” DATA WATCH The highlight of the economic calendar is likely to be the February employment report, on Friday. A Bloomberg News poll of economists estimates that net job creation eased to 100,000 from 111,000 in January. The unemployment rate is expected to hold at 4.6 percent. nytimes.com