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To: Jay8088 who wrote (7591)	9/3/1998 12:14:00 PM
From: Silicon Trader	Read Replies (1) \| Respond to of 10227

I concur, MR BIG joins the bears' I will leave my order open for $ 15.00 dollars, until then i will carry a short position , piling on with any spike. JMO sorry guys, Maybe next year will do it for us. Take a look at this: To: Tommaso (25923 ) From: Jeffrey W Grolig Thursday, Sep 3 1998 2:34AM ET Reply # of 26323 RE: MARTY ZWEIG.... Zweig has always impressed me as a scientific market researcher. He is not a Guru like Cohen, Fleckenstein, or Acampora. You probably are familiar with Zweig's research of the stock market over the past 100 years and the various correlates [I prefer this to indicators because indicators are plain voodoo, while correlates are items that consistently present in certain trend situations and may have predictive validity] he discovered in preparation of his Doctorate Thesis. He has some correlates that have been consistently found to occur in virtually every US Bull Market over the past century. These [set forth in his book, Winning on Wall Street] include a liberal Fed Policy [ie rating of 3; indicating at least 2 discount rate cuts] and 2:1 up/down volume average over a period of at least 10 days. He also has found some common correlates of Bear Markets that can be employed to distinguish a Bear Market from a correction. While there is no one common correlate of all 19 Bear markets of this century, all of these turn out to have at least one of the following conditions: [THE THREE "BAD BOYS"]. #1. Extreme Deflation as defined by a decline in the PPI of an average 10% per annum over a period of 6 months. #2. High Relative P/E ratios [ie usually in the high teens or twenties]. #3. An inverted bond yield curve [long term rates lower than short term]. If none of these bad factors are present that seem to herald a Bear Market, Zweig recommends buying freely into a 10% dip on the theory that a Bear Market would be unlikely. If one or more are present, Zweig recommends not buying the dip as the conditions would be ripe for a Bear Market. Historical analysis shows us per Zweig, that the Bear markets that contained one of the 3 "bad boys" had a moderate ultimate decline; on the order of 30%. History also shows that in those Bear markets with 2 "bad boys", the average decline was much worse to about the 45% level. Finally, only one Bear Market in history had ALL THREE BAD BOYS present---the Great Bear Market of 1929-1932. This makes sense because the each Bad Boy is a signal of bad conditions for business and corporate profits. Having all three present at the same time is a Triple Whammy for stocks--and deflation is the worst condition for stocks, worse than inflation. Here are the facts: A). We are rapidly approaching an inversion in the yield curve. [We will soon invert IMO.] B]. We have worldwide deflation as evidenced by rescession in Latin Markets and the drop in the CRB to a 21 year low [low oil, gold, metals etc--with no sign of the trend reversing]. Although the US has not yet met the Zweig definition, I believe that the fall in commodities worldwide signals worldwide deflation and an impending rescession in the US. C]. The average P/E in Investor's Business Daily was at a high recently around 26 to 30. This already qualifies for one bad boy. In summary, we have one "bad boy" and Zweig would say based upon the analysis in his book therefore to NOT BUY into the 10% correction as conditions are ripe for a Bear market of a potential magnitude of 30%. But look further. We have already dropped almost 20% on the dow and it looks like we will also have 2 more 'bad boys' soon, namely extreme deflation and an inverted yield curve; both very rare, but very treacherous conditions. If history is any teacher , we all need to be EXTREMELY CAUTIOUS as the only other correction in history to have all 3 bad boys present [extreme deflation, high PE ratios, and an inverted yield curve] ended up in The Great Bear Market of 1929 to 1932 and was down about 90% before the carnage was over. Will we drop to 4000 dow? Based on the above, we may fall lower. IMO, the media, Abbey Cohen, etc, are hyping naive investors into staying in the market while Fidelity, Vanguard, and the other major funds evacuate. Since the "little guy" on main street, and investment club investor seem to be holding now and buying into the dips [as they have been rewarded in the past by doing so], with the encouragement and "hand-holding" of their brokers [who have never seen a Bear market], I believe most of the longs will get burned, fried, led over the proverbial cliff, etc. The Economics professors from Wharton and Yale [featured on CNBC and not hypsters like the unscientific "gurus"] that I have recently listened to, have been making similar dire predictions based on the worldwide deflation. Although I have not heard from Zweig lately on his position, his book makes clear what he would say based on his research. IMO, I would be cautious, maybe buy a few puts, and stay in cash. Good Luck to all, Jeff P. S. For those of you not familiar with Zweig, he employed his analysis to correcly predict the 1987 crash. About one week before that crash, he purchased index out-of-the-money puts with 1 % of his entire fund under management. As a result, while other funds were down 25 to 35% after the crash, the Zweig fund was up about 8% ! GO NRAG MBA $$$