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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 (19164)	5/27/1998 12:34:00 AM
From: donald sew	Read Replies (1) \| Respond to of 94695

Bill, >>> What makes you think that it has decoupled completely? When I run correlation studies between the two, I cannot find any reason for what you say... over 144 day period, nothing has changed in the past 6 months. If you go to 8 or 17 days, it bounces from over .5 correlation to -.5 correlation over and over again. <<<< I do not know what the mathematical basis your correlations is structured on so I cannot comment on such parameters. However, I do have a mathematical formula which I developed myself, which I call the GUITAR, which is showing a strong divergence of the normal correlation between interest rates and the stock market. And according to it, it is at maximum divergence. I am not fully satisfied with it yet since the quantification of the divergence is still a bit rudamentary, but Im still working on it. Without going into the actual formula, we had a strong decrease in the interest rates today, .05% is not small on an average basis and the a 150 point drop compared to an average drop since Jan is also not small. And if you consider the drop from the intraday highs the drop was almost 200 points. That is also greater than the average. Since Jan most of the time if the interest rates were to drop the market would do well. Well today the interest rates dropped substantially but the market dropped substantially which is not normal. Nextly, I do not recall saying that the market decoupled completely, meaning forever. If I did use the word completely then I have to take that back. Nothing in this market is a certainty and if you read my many posts, I normally attempt to keep it low-keyed, and stay away from expressive comments like buy with 2 hands. So if I did say completely then I would like to retract that comment, since it is normally not my style - and I will admit that I goofed. I dont believe the HiTech crashed, but per my short-term technicals, set at my parameters it is starting to technically breakdown. I do have a specific definition of a technically breakdown which is quite analytical and quantifiable - basicly its when the technicals I use are at such an extreme that they mathematically cannot go any lower but the price continues lower. With logic it also means that my technicals have reached an interim when they are basicly useless. The definition is a bit more complicated but just wanted to keep it short. Bill, I do not feel we have the ingredients for another OCT 27, at least not just yet which I have stated before. In fact I think that we will have a pop at the end of the week but the pop may not be as strong as I originally thought. In fact I was specific to say that my original support area of 8950-9000 support area may not hold and that the next support was at 8750. The Oct decline was about 1000 points, so if the 8750 support holds, that would mean that this pullback would only be about 400+ points, nowhere close to the OCT decline. Its fine if someone disagrees with any position. Just the same way you would feel that it was OK to disagree with you you when you were calling for 9600 and to buy with 2 hands. Theres nothing wrong with disagreeing. I hope I explain my position thoroughly, since you have a legitimate question based a correlation equation you have, but that I dont follow. I am still holding with my position that both today and tomorrow will be down days, and that tomorrow was also to be a substantially down day. I did not originally believe today was going to be down that strong though. As a guess, I feel we could still see a minus 100+ down day (intraday). Seeya