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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: Jack Jagernauth who wrote (5129)	7/22/1998 8:38:00 AM
From: OldAIMGuy	Respond to of 18928

Hi Jack, It has been of high concern to me to watch for a repeating pattern from 1987. I was about 15 months into "full time" investing at that point and had the basics of the Idiot Wave in place at the time. By building the database backwards to 1982, the 1987 period looks unique from here. So far, only the persistant high risk of the Relative Valuation can be said to be common th 1987. That year ALL FOUR components rose well into their respective high risk areas and stayed there a very long time. I only really get nervous when all components are harmonizing to the same funeral dirge! During most markets each component wanders its own direction. The opposite is also true of the data on the IW. When all four components are confirming Low Risk, it's been time to hock the furniture and go LONG the market. We haven't seen one of those since 1990, but I sure can't complain about the "Average Risk" market that we've been experiencing for almost all of this decade. The persistance of the Bull has embarassed many a market measure during the Nineties. Our Idiot Wave has been careful to suggest various Cash Reserve levels that have worked well with the type of stocks best suited for AIM. With Sector Rotation, the IW sometimes may miss the switch, but usually Divergence points up what's happening. October, 1987 was a time when the market had already given up a significant amount of its summer time premium BEFORE the crash. After such a "graceful" decline through Sept. and early Oct. it surprised almost everyone when the market came unglued all at once. Call it a loss of faith. It seems as though the market now prefers to slaughter one sector at a time. Then after the flies have cleared away it gets on with the bull market. Best regards, Tom