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To: DaveMG who wrote (14831)	9/10/1998 4:49:00 PM
From: dougjn	Respond to of 152472

The value of technical analysis, it seems to me, is as a reading of psychology. I tend to think most technical analysis, at least when it gets elaborate with all sorts of patterns, is illusory. However there clearly is such a thing as momentum. And base building as well, when confidence is being re-established. Markets tend to correct after they get over extended. Because it then takes little to upset the increasingly unanimous psychology. Etc. But I think all bets are off when non-predictable exogenous events, which matter, enter in. We have a lot of those happening, and potentially still to happen. To some extent the ebb and flow of concern over Clinton is predictable, up to a point. But do we know if Brazil will devalue? Do you know how important the voting of articles of impeachment, or the move towards that, would be to psychology in Brazil, and in American financial houses towards holding Brazilian or other developing world instruments at any price? Etc. In other words, I think what is going on outside the windows of Wall St.'s own price movement worlds is at least as important as the internally determined cycles of psychology at the moment. The latter being what technical analysis might help with. I just have this abiding feeling that the market is still in denial over the possibility of a recession. Sure its worrying about financial and political shocks, and how many points they might hurt. But it still can't admit there's a real possibility that profits, overall, go down and perhaps significantly in 1999 as compared to 1998. And that maybe that continues for part or possibly all of 2000. Once that 's getting priced in as a real possibility, I'll be a lot more positive. Of course the time to great REALLY positive is when the market thinks all that is a virtual certainty and a great depression is possible. That would be a screaming buy. That probably won't ever get priced in, however. And those events probably won't happen. Doug