Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (12872)	7/22/1998 7:30:00 PM
From: Chris	Read Replies (1) \| Respond to of 42787

Hi dennis: you said <<It takes A LOT MORE than charts to do that. >> That's why I post my charts. A simple trendline or moving average break CAN signify a CHANGE in trend. I think you are assuming a mkt top has to be proven by economic data and fundamental data, interest rates, etc,etc,etc. As a technician, I solely use the charts. I hope everyone sees that TA DOES NOT have to be hard. You only make it hard. Enough for today. I'm loggin' off.

To: dennis michael patterson who wrote (12872)	7/22/1998 8:30:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

I do not know of an analytical tool available that can predict market tops. Calling a market top is part TA and part other factors that come down to a judgement based on experience. There are tools that can support a decision but none that I know of that can say: "Yup. Right here on this X mark is when a market top will happen". The only tools I know of are ones that will call it after the fact. I think an approach that can be used to decipher the possibility of a market top would rely on a combination of tools and market observations. Part of the factors considered would of course depend on if your are attempting to call a short term, intermediate term, or long term market top. An analysis for a longer term market top would IMO incorporate economic data along with corporate earnings data and projections. An approach to calling market tops can include A/D, New Highs/New Lows, and other market breadth measures. An analysis of key indices using indicators such as the MAs, OBV, MACD for daily, weekly, and monthly charts can be used. An analysis of the technical strength of key stocks is useful, most particularly the stocks that have been leading the market rally and also paying attention to the weaker out of interest stocks that come to life near the end of a rally. An analysis of large block activity and where this money is moving to, where it can be out of a sector that is leading the market like the techs for example and moving into bonds and MMs is important. Sentiment measures are also important to calling a market top. This can be derived from traditional measures like put to call ratios to seeing how the market responds to major news events including earnings of key companies to looking at what type of stocks are in play, defensive issues, growth issues, or small caps with no earnings history like the Internet stocks. An intermarket analysis is also worthwhile here as Pring and Murphy have proven. An understanding of all of the above is important to calling market tops. The short term corrections that I have been able to foretell came from an understanding of all of the above except for the economic picture and earnings picture of companies. Seeing the apparent rounding top that we appear to have started to make, and looking back, I can see where the earnings profile of companies as a group can help foretell a top of intermediate term duration or longer. Judy was right here. I remember she looked at among other things the earnings profiles of various companies including the analyst projections on both companies and industries to come up with a prediction on an intermediate term top a few months in advance. Quite impressive. Please Judy, correct me if I am wrong on the fundamental type data you used for your projection. So evidently there are ways in calling market tops like longer term tops. But I do not know of any tool that can project market tops of any duration except possibly a market pullback of very short term duration. I have seen some here have success in this area with market timing tools. And what tools appeared to work before in past markets will no longer work in this market. Too much has changed. I think this is what those same traders that use market timing tools are finding out. This market before October 1997 is different than the market January 1998 to lets say May 1998 which is still different than the current market we are experiencing now. Here we went from basically an earnings growth driven market to a liquidity driven market to now a sentiment driven market with the return of the techs. Just my opinions of course. I do have plenty of them, don't I? ;) Bob Graham PS: On the "rounding top" idea. I think as long as there is speculator involvement like we have been witnessing, we may see this come to a "blow off" top. Volatility has been quite impressive in this market. And I do think more mutuals this time around are taking the speculative road to short term profits which contributes to this volatile quality of the market.