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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (9826)	8/14/2008 1:05:23 PM
From: Terry Whitman	Respond to of 33421

To clarify: At a cyclical bear market low (as measured by a broad market index, such as the NYA or the SPX)- Have small caps and/or techs been leading the market (outperforming) at the lows? I know that they often outperform AFTER the lows, but I can't really find any instances of them outperforming coincident with the ultimate lows. Maybe a picture would explain it better. Put up a chart at stockcharts.com of $spx:$rut, and set the dates to 2002-2004. You'll see that at the October 2002 lows, and the later March 2003 lows, the ratio is in a bullish posture, shorter term moving averages being above the longer term, meaning Large caps were outperforming the Small caps. I believe that this is the norm, since the small caps are generally hurt worse by the bear. Now if you put up the same spx:rut chart for the latest (July)bear market lows, you'll see that the SPX is very much Underperforming the RUT there, and still is. This suggests to me that we still have some ways to go before this Bear is through. I know there are often exceptions, so I was inquiring if anyone could come up with one or more..

To: John Pitera who wrote (9826)	8/14/2008 5:45:03 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

An edit in the post that I'm responding too. I had a PM response from The Falcon that made me realize I wanted to ammend my earlier post. I actually think that what we have seen in commodities is more like 1974-1975, with higher highs to come. I should amend that post. I was thinking about bull markets in stocks, when they began. I think AJ and your outline for what the stock market does over the next couple of years is making sense. The key idea is that this bear market in stocks is not nearly done. when an asset class is so loved that a mania develops, it typically takes a total loathing and revulsion of the asset class and it has to be truly out of favor before the psychological bottom is in. JOhn