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To: donald sew who wrote (48449)	7/26/1998 10:30:00 AM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 58727

Agree with all you say, especially the stochastic indicators etc. However, IF we do go up this week, doesn't the DOW theory say we SHOULD pull back about 2/3 of our previous run which might show this was just a healthy correction so far. I know that you should always use other indicators to qualify what you see and as you pointed out all the other indicators are ugly but again IF we bounce and the MACD, A/D etc improve, then we will have to see if we can slow our rate of ascent and reach a higher high. Personally I don't think the fundamentals will support a run right now as there is no news on the horizon to justify a climb so I am definitely short term bearish but I think this 2/3 correction has been healthy so far. It would be good to stabilize here a while if it weren't for those weekly candles, double tops and H&S patterns all over the place.

To: donald sew who wrote (48449)	7/26/1998 6:40:00 PM
From: Kenneth R Miller	Respond to of 58727

Don .. In support of your's and Jerry Favor's report.. I found this on the Data Point site of AOL.. just more bear stuff: 7/21/98 WAVE SIGNALS by Mike Drakulich RINGING THE BELL Well it's late July and things are definitely heating up in the stock market. I have commented for months on this being the time frame for a major market peak. And when I look at the Ewave pattern, market internals, and thru the roof sentiment readings, I can make the strongest case since 1990 for the end of this Bull market run. The A/D line barely retraced 35-40 of it's decline to the mid June lows, as prices soared to new highs. The "quality" of the rally is nonexistent, it has been lead by a few glamour stocks while the vast majority of stocks languish. The number of new highs/lows has been and is strikingly negative. Sentiment as measured by the Rydex Bull/Bear assets ratios went above the 6.0 level for SEVEN staright days, totally blowing away the previous highs from earlier this year. In my view we are either complete to the upside, or one final rally to the upside towards the 1200 S&P cash level could occur. The key is the 1150-1155 S&P cash level. If that is broken the odds are that the final top is in, and a 20% plus decline into the fall is likely. If we get that final rally towards S&P 1200, it will be one of the best ever risk/reward short sales in my opinion. If you think there has been a heat wave in Texas, wait until the upcoming Wall Street meltdowm hits over next several months. Todays decline saw a nasty downside reversal in the blowoff tech stocks and Nasdaq indices. P/E ratios have been pushed where no market has gone before, everything has been rationalized, and we of course are in a new era. Well, we will see, as once gravity and reality begin to be applied to this market, it will fall much faster than it ever went up, that is how parabolic blowoffs end, and how the piper is paid. This is a very bearish post, and I certainly could be dead wrong, as I have been before in predicting the demise of this Bull. But I believe the stage is now set as it hasn't been since at least 1990, and the ODDS are as high as they get that a huge decline lies dead ahead. Good luck and let's see what the next several weeks and months bring. and more bearish posts: The summer rally, which started in the middle of June, was nothing more than a bounce in the market. Some of the capitalization-weighted indices made new highs, while non-weighted indices did not. In the last issue of Bert Dohmen's WELLINGTON LETTER I wrote that the summer rally was probably the last opportunity to sell before a more substantial decline in the market. I wrote: "I would be very surprised if the correction that started in April is finished. In fact, the current rally may just be part of a broadening top." That was right on target. It's interesting how fast the positive sentiment about Japan and Russia has eroded. In today's world of instant communications it doesn't take long for someone to yell "the emperor has no clothes." In Japan, the new head of the Government is once again a person without imagination or new ideas. Japan had an opportunity to choose someone who had more progressive ideas, but the bureaucrats are playing their same old game. Economic statistics confirm that our economy is weakening rapidly and that the "Asian Contagion" is pervasive. Fed Chairman Greenspan's testimony before Congress this week was the typical warning about vigilance against inflation. The market interpreted this as meaning no imminent interest rate reduction by the Fed. So far, everything is still going according to schedule, except for the fact that I thought this rally might continue into early August. For the week, most of the important market indices were down from 3% to 5%. Specific sectors, such as brokerage firms, were down 8%. The Dow Industrials lost 400 points. More important is that the breakout to a new record high saw no follow-through and was immediately reversed to the downside. Such false breakouts are very dangerous. But while the Dow Industrials were making a new high, other major indices, such as the Value Line, merely retraced 50% of the three-month decline ending in the middle of June. A 50% retracement of a prior decline is technically normal before the longer-term downtrend continues. Today the Value Line index (geometric) penetrated its June low on an intra-day basis. The NASDAQ Composite lost 77.77 points for the week. Maybe that's a lucky number and means that this is the end of the decline? Remember, the bear market low in the Dow Industrials in 1982 was 777. The market has a chance for a bounce early next week, as several important indices are at first support. However, if the market is down sharply on Monday, watch out below. What is the chance of a new upmove towards Dow 10,000? Instead of saying "impossible," I'll say it's highly improbable. In conclusion, I see my scenario outlined in late April still holding true. Many of my technical indicators have seen the worst deterioration since 1990, which was followed by a 20% correction in the market. Such a correction now would take us down to the Dow 7500 level. It would certainly test the courage of investors who claim that they are "in for the long term." But it would create a wonderful buying opportunity for those who are liquid. On our Hotline, and in the next issue of our monthly publication, I will give you some specific recommendations on how to profit from such a correction. We have always done very well in bear markets and sharp market declines, and see no reason why we cannot do so again. I wish you a wonderful weekend, Bert Dohmen