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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: William H Huebl who wrote (12763)	1/7/1998 10:32:00 PM
From: James F. Hopkins	Read Replies (2) \| Respond to of 94695

Hi Bill; Let me see if I can say this were it makes sence. The DOW seldom tells the truth about the market. This is one I track and have preformed an atopsy on. I track it four ways and compare the results. I have all the stocks in the DOW in TWO different paper portfolios. One is weight by price, owning more of the lesser priced stocks than the higher priced ones. The second and more importent one is weighted by the MARKET CAP of each stock owning more of the BIG CAPS..and it better reflets what the market is really doing as thoes with the most shares outstanding I have more weight on. ( I re-weight when I get time to around to it ). -------------------------- Now the DOW that the public sees is not really weighted at all, that's a fact , each stock inside the index moves the index the same amount for each dollar it goes up or down. SO that a $1 MOVE in Union Carbide, with it's 6 B cap, actually does the same to the index as a $1 move in GE with it's 245 B market cap..and there lies one of the big false hoods. A small company worth less than 3% of the big one can make the DOW Index dance just as much as the giant. ------------------------------------------- I said one of them, the next is when you look inside you look at volume of the individual gainers and losers..while all the INDEX shows is price change..( some were you may get the total volume, ( I could add it up ) but that is not the point ! The point here being that the gainers may have much more volume than the losers, yet price wise if the lossers lose more on just a fration of that volume the DOW INDEX shows DOWN, no matter that inside of it volume wise the gainers added several billion dollars more to the DOW than the losers took out. ---------------------- Today the DOW shows DOWN $3.98 , ha my price index has it up over $40, and my cap index up $15, to top that off the gainers inside the DOW today had much more volume as a whole, than the lossers..in fact several of the losers traded less than a M..while the 3 top gainers were trading over 5m ( i was 6.8m ) and the top losser was like 4.2 M shares in reality the DOW Stocks were up today..it was also up yesterday, but that's not what the public saw. ------------------------------------- So there is at least one reason the VIX may not trace the opposite pattern of the DOW index, THE index is a lie most of the time. IT only comes in balance rarely; it's leading or trailing most of the time, with low volume , and sometimes smaller caps showing it to be the exact opposite of what it is really doing. Some times it's a lot, sometimes a little, but just as often as not the tail is wagging the dog when it comes to the DOW INDEX. -------------------------- With out professing to know much about TA, I have examined THE DOW index inside out, and have enough sence to know that TA can not be any more dependable than the INDEX is good..and with the DOW..19 of 20 times you get garbage, not reality. ------------------------- BTW it is my understanding that most other INDEXs are simular in construction..if weighted at all it's generally just so many DOLLARS split even amoung the amount of issues in the INDEX, ( that don't and cant tell you what the market is really doing ) People who go by them are wip sawed into a frenzie. --------------------------- Today early when it droped I was looking at trades..I could tell it would rebound, short sellers were there on every up tick ( scared and almost in panic ) at 1pm it turned and I bet many who shorted early covered, meanwhile money flowed into the MEGA caps..and while more issues stayed for a small loss than gainers..the volume was to the gainers and more with the big caps..so in reality verily I say to you THE DOW WAS UP..the index lied. IN fact it was up yesterday too. ------------------------- AND when the index droped back on OCT 27th..it was playing catch-up..the DOW had already sold off..this time when it runs up..and the fools jump on..hey they will be behind the curve to start with, as the index itself is behind the curve. I'm not pulling your leg, I'v done a lot of work on the stupid DOW INDEX. Disecting it like I was doing an autopsy I found ways to use it and get info out of it that was never intented. I bet I'm not the only one. :-) Jim