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

To: Vitas who wrote (25952)	9/1/1998 3:07:00 AM
From: William H Huebl	Respond to of 94695

Vitas, I have that in my database. Here is a summary of a private reply to another poster: I can try to answer those questions, Bob, but please realize I am not an expert and can only give the benefit of my limited experience and skills. I have DJ data back to 1972 and based on a simple review of that data using relative and stochastic momentums: 1972-3 sell-off, AT THE POINT WHERE WE ARE NOW, didn't bottom for 6 months and a reasonable buy signal did not occur for several months after that. 1976-7 sell-off, AT THE POINT WHERE WE ARE NOW, didn't bottom for 18 months and a reasonable buy signal did not occur for several months after that. 1976-8 sell-off, AT THE POINT WHERE WE ARE NOW, didn't bottom for 18 months and a reasonable buy signal did not occur for several months after that. Interestingly enough, it took until April 1981 to get above the pre-bear sell-off highs. That is over 4 years to recover back what was lost. 1981 sell-off, AT THE POINT WHERE WE ARE NOW, didn't bottom for 12 months and a reasonable buy signal did not occur for a month after that. 1987 crash, AT THE POINT WHERE WE ARE NOW, was the bottom and a reasonable buy signal did not occur for 6 months after that. The '90 and '94 sell-offs were copies of the '87 crash... perhaps the new paradyme of bear markets. 1997 took place over a longer period of time and we got the buy signal early Feb this year. So what does that suggest for the future? - this is the first sell-off in which there are non-riskable assets involved - namely retirements... those burned during this last week will NOT likely risk those assets so casually in the future; - the roots of this sell-off are NOT in such things as P/Es and so forth. I believe they lie in the "Don't worry, be happy and buy the dips" mentality fostered by the recoveries after the serious drops that occurred back from the 1987 crash. That paradyme is being seriously challenged this week and unless we pop back out soon, will be replaced by another. However committed to that paradyme, I believe the geopolitical events of the past 12 months have opened investors' eyes and more than one king parades without clothes. So we see the paradyme shift occurring as the reality check hits home. - it really doesn't matter when the selling finishes. It is when we get the buy signal that counts. We have clearly been in a downturn for most mutual funds since mid-July based on VGY averages which fortold the major pullbacks in the markets over the years. The DOW is a different matter... you can read the posts back and forth over the last month or so where my comments focused on the VGY as market leader but admitted the DOW was not in a bear market yet. IT STILL ISN'T. That may well change over the next couple of days... especially for a protracted sell-off. - the 1987 crash CHANGED things immediately. The 200 day ma on the DOW immediately started falling. However, in all the sell-offs since then, the DOW 200 day MA has taken weeks or months to turn down... many times not at all INCLUDING THIS SELL-OFF THUS FAR. My best guess is that the markets will test whatever low there might be out there tomorrow... perhaps several hundred points, perhaps a 1,000 points down... BUT WILL RECOVER! The next question is, will things get worse after that rather than better and when will we get a buy signal? That is the best I can do for now, Bob... hope it helps. Bill