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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: NickSE who wrote (12777)	5/3/1999 10:04:00 PM
From: Giordano Bruno	Respond to of 99985

Thanks Nick

To: NickSE who wrote (12777)	5/4/1999 2:17:00 AM
From: John T.	Read Replies (2) \| Respond to of 99985

As Record Beckons, Dow Theorist Is Defiant (4/30/99) Meanwhile, the Dow Jones Transportation Average was up 32, or 0.9%, to 3675. Before the sudden bout of selling, the measure was well on track to eclipse its all-time high of 3686.02, set April 16, 1998. If the average establishes a closing high today it would eliminate (according to its basic premise) the bearish signal being cast by Dow theory, although some purveyors of the tool say it has been bullish for some time. However, the man widely considered the dean of Dow theorists, Richard Russell, editor and publisher of Dow Theory Letters, wrote April 21: "The transportation average topped on April 16, 1998. The longer the time lag for confirmation, the less valid a final confirmation. Therefore, if the transports should finally advance above 3686.03, I would not be particularly impressed. Actually, a final belated confirmation might even signal the end of the entire rise in the big-cap averages. In other words, it could be the 'final gasp.'" Reached at his La Jolla, Calif., office this morning, Russell echoed the sentiment. "My feeling is it's been so long [since the transports' last record], it's sort of a nonevent," he said. "Partially, the basis of Dow theory is value. One of the basic elements of value is return on investment. With [dividend] yields at 1.2%, you're just betting on continued capital gains. The total bet is stocks will continue to go up, it's an unprecedented situation. I think we're in the process of topping out." Russell was unbowed when asked how he could cling to a negative stance when major averages have appreciated at least 25% since Aug. 4, when he first espoused a bearish view. "To me, it's been a bull market in averages and a bear market in everything else," he said. "The other thing is, we've got the biggest public participation in history. I saw speculation in '68, but never as widespread as this. I think when this thing goes it will be a long, drawn-out bear market. The bigger the excess on the upside, the worse it is on the downside." Russell acknowledged being (very) early on the call and could not predict when the turn occurs. "I know it's hard to believe, but it's hard to believe what this bull market is doing," he said. "We've got all these mutual funds and hedge funds playing with someone else's money, which gives you a huge, wild market. We've never seen anything like this. No bull market goes on forever. I hope I'm wrong [about what happens next]; I've got kids." Source: thestreet.com