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

To: HairBall who wrote (23517)	8/6/1998 8:09:00 PM
From: Peter Singleton	Read Replies (1) \| Respond to of 94695

ok, ok, so I got a little caught up in the R2000 move up. It's still a conundrum. How the small caps can already be in a wicked bear market that's developed over a number of months, while the big caps have continued to sail along. things I'm wondering about. - the balance of the evidence from the big picture technicals and fundamentals is that there's a good chance the major indexes go south, and go south big time, sometime in the coming weeks. How likely? I don't know. I have a bad feeling about this, though. - if we go south, will this be the bear market that ends the bull market, as in long, protracted, steep and painful? I'm less sure of this than I am of the above, but I think there's a good chance it may. - will a bull-market ending bear market coincide with difficult economic times? Hard to say. There's always a best-seller out there with a title like "how to prosper in the coming bad times", probably has been each of the past 200 years. There's always a case to be made, sometimes strong, most often weak. There are some very problematic aspects of the environment we may be going into. There's so little visibility going forward since the scenarios are so wildly divergent. Generally the odds are best on betting on the economy muddling through even a steep stock market decline. - what do we make of the small cap bear market we're already in. I can think of two, simplistic explanations. I'm sure there are others, probably more credible, but here's mine. a - it's some form of macro "sector" rotation, and the small caps will bottom then move back upward independent of the big caps. This seems unlikely historically, but there's some modest precedent in the 1966-1973 period where the small caps underperformed, and the 1974 - 1982 where they wildly outperformed the market as a whole (thanking Tom Miller on one of the SI threads for that insight). b - it's a bad sign. it indicates there's something a lot bigger than we're aware of rolling through our financial markets, and we just don't feel it yet. the image I have is of a tidal wave in the open ocean. a foot or two high, but thousands of miles wide .... with incredible force as it moves inexorably towards the continental shelf, where it gets funneled up, well, you get the picture. This is the scenario I worry most about, since this means what's happening is real big, almost a Schumpeterian, Kondratieff (sp?) wave slamming into the foundations of our economy. Got lots of questions, and almost no answers ... I'll be watching closely in the coming weeks and months, that's for sure. Peter