Go to Jeff Salisbury LWGate Home Page.From: Ian <ianstm@shaw.ca>
Subject: Re: [CANSLIM] Panic attack ...
Date: Thu, 24 Jan 2002 10:26:49 -0800
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Walt:
My only interest in TRIN readings is in when it reaches extreme sustained historical highs - which I take to indicate exhaustion selling - meaning it will be followed by a significant upturn. These readings are very rare - so there is no way I would look to TRIN for short-term wiggles.
That being said, I am surprised that you think the extreme panic recently indicated means that "it will probably be followed by a downturn". Why would you think that? My take is that it signals that we are running out of indiscriminate sellers.
I believe that the recent strong volatility in both directions is indicative of the beginnings of a new bull. IMHO, it is needed to separate out the most tired of the last bulls winners - those are the ones that drop in the selloffs, but dont rebound strongly in the surges.
I find it interesting that most on this board are quite bearish, while I find myself with the lowest cash position in well over a year, and a growing supply of buyer-friendly microcaps.
Cheers,
Ian
----- Original Message -----
From: Tom Worley
To: canslim@lists.xmission.com
Sent: Wednesday, January 23, 2002 10:37 AM
Subject: Re: [CANSLIM] Panic attack ...
Walter,
I would have to disagree with part of your conclusion. While the housing industry did not prevent the start of a recession, it is likely that it significantly helped to make it a shallow recession, and will help end it early. There still seems to be a lot of juice left in the home builders group, and I was adding more to my three positions in my fund today. Adding to Consumer Sentiment, in addition to lower mortgage payments, is lower energy costs. That, plus the tax cuts that started 1/1/02, means a little more money in everyone's paycheck or wallet.
Tom Worley
stkguru@netside.net
AIM: TexWorley
----- Original Message -----
From: walter nusbaum
To: canslim@lists.xmission.com
Sent: Wednesday, January 23, 2002 11:58 AM
Subject: Re: [CANSLIM] Panic attack ...
Ian,
"Stock Market Cycles" was rated "F" in up markets and A+ in down markets with an annualized gain of 4.6% since 5/31/90(sic), according to Forbes(22 JAN 01); not exactly the kind of numbers that inspire confidence. At any rate, there is nothing in the theory or construction of TRIN that allows for speculation as to the degree of market change. It is a great market reversal indicator and that's all. According to Elder, the market can stay over bought/sold for some time and the time to take action is immediately after TRIN makes a reversal off its high/low reading and re-penetrates the overbought or oversold line.(The Equis link says to buy/sell upon reaching the line, which is a specific number. Elder's recommendation puts you in sync with the new trend. I don't know what TRIN was doing during the debacle of 2000, but I suspect(using the Equis standard) it gave buy signals loooong before their time).
The lines themselves should be revisited, and redrawn if necessary, every three months based upon the interaction of TRIN and the Index that is being used. The lines indicate areas of concern and specific numbers above or below the lines have little meaning. TRIN can not be used mechanically- the same readings mean different things under different market conditions(Bull/Bear). TRIN gives its best buy/sell signals when divergence from the Index being used is observed and when used in combination with the New High-New Low Index.
Having said all that, 1.5 is a doozy of a number and will probably be followed by a downturn. I know nothing, but have little confidence in a return of the Bull for many moons. The automobile industry with its attendant suppliers such as steel, glass, rubber, plastics, etc., has been trashed; housing has typically propelled the new Bull, but housing has already had its own run with little effect on the overall market. Consumer Confidence would seem to be a bright spot, but it probably is the result of lower mortgage payments due to massive refinancing and bargains picked up by consumers at the expense of the producers, the very folks that we look to for increased earnings. There's more, but this grows lengthy so I'll shut up. Thanks for your note.
Best wishes,
Walt
----- Original Message -----
From: Ian
To: canslim@lists.xmission.com
Sent: Tuesday, January 22, 2002 12:32 PM
Subject: [CANSLIM] Panic attack ...
Here's a very interesting recent quote from Peter Eliades of Stock Market Cycles: "At the end of todays trading, we noticed that the lowest single day TRIN reading over the past 10 trading days was 1.143. That seemed unusual to us, so we asked the computer to look back over the past 61 years (since 1940) to find out how many other 10 day periods had transpired without one single day reading below 1.14. We were stunned at the answer! The answer is none."
The 10 day ARMS index (TRIN) got up to 1.5 again last week. It used to have huge historical significance in indicating that a major bottom was to be put in within 20 trading days. It has now happened 4 times in the past year alone.
I don't pretend to know what it means, but there certainly has been a considerable amount of panic over the last 2 weeks.
Ian
PS - Here is a quick overview of the ARMS index that someone asked for: http://www.equis.com/free/taaz/armsindex.html
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<DIV><FONT size=2>Walt:</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>My only interest in TRIN readings is in when it reaches
extreme sustained historical highs - which I take to indicate exhaustion selling
- - meaning it will be followed by a significant upturn. These readings are very
rare - so there is no way I would look to TRIN for short-term
wiggles.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>That being said, I am surprised that you think the extreme
panic recently indicated means that "it will probably be followed by a
downturn". Why would you think that? My take is that it signals that we are
running out of indiscriminate sellers.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I believe that the recent strong volatility in both directions
is indicative of the beginnings of a new bull. IMHO, it is needed to separate
out the most tired of the last bulls winners - those are the ones that drop in
the selloffs, but dont rebound strongly in the surges.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I find it interesting that most on this board are quite
bearish, while I find myself with the lowest cash position in well over a year,
and a growing supply of buyer-friendly microcaps.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Cheers,</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Ian</FONT></DIV>
<DIV> </DIV>
<DIV> </DIV>
<BLOCKQUOTE dir=ltr
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:stkguru@netside.net" title=stkguru@netside.net>Tom Worley</A>
</DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:canslim@lists.xmission.com"
title=canslim@lists.xmission.com>canslim@lists.xmission.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, January 23, 2002 10:37
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Panic attack
...</DIV>
<DIV><BR></DIV>
<DIV><FONT face=Arial>Walter,</FONT></DIV>
<DIV><FONT face=Arial></FONT> </DIV>
<DIV><FONT face=Arial>I would have to disagree with part of your conclusion.
While the housing industry did not prevent the start of a recession, it is
likely that it significantly helped to make it a shallow recession, and will
help end it early. There still seems to be a lot of juice left in the home
builders group, and I was adding more to my three positions in my fund today.
Adding to Consumer Sentiment, in addition to lower mortgage payments, is lower
energy costs. That, plus the tax cuts that started 1/1/02, means a little more
money in everyone's paycheck or wallet.</FONT></DIV>
<DIV> </DIV>
<DIV>Tom Worley<BR><A
href="mailto:stkguru@netside.net">stkguru@netside.net</A><BR>AIM:
TexWorley</DIV>
<BLOCKQUOTE dir=ltr
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:wnusbaum@airmail.net" title=wnusbaum@airmail.net>walter
nusbaum</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:canslim@lists.xmission.com"
title=canslim@lists.xmission.com>canslim@lists.xmission.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Wednesday, January 23, 2002 11:58
AM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> Re: [CANSLIM] Panic attack
...</DIV>
<DIV><BR></DIV>
<DIV><FONT size=2>Ian,</FONT></DIV>
<DIV><FONT size=2>"Stock Market Cycles" was rated "F" in up markets and A+
in down markets with an annualized gain of 4.6% since
5/31/90(sic), according to Forbes(22 JAN 01); not exactly the kind
of numbers that inspire confidence. At any rate, there is nothing
in the theory or construction of TRIN that allows for speculation as to the
degree of market change. It is a great market reversal indicator and
that's all. According to Elder, the market can stay over bought/sold for
some time and the time to take action is immediately after TRIN makes a
reversal off its high/low reading and re-penetrates the overbought
or oversold line.(The Equis link says to buy/sell upon reaching the
line, which is a specific number. Elder's recommendation puts you in sync
with the new trend. I don't know what TRIN was doing during the debacle of
2000, but I suspect(using the Equis standard) it gave buy signals
loooong before their time).</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>The lines themselves should be revisited, and redrawn
if necessary, every three months based upon the interaction of TRIN and the
Index that is being used. The lines indicate areas of concern
and specific numbers above or below the lines have little
meaning. TRIN can not be used mechanically- the same readings mean
different things under different market
conditions(Bull/Bear).</FONT> <FONT size=2>TRIN gives its best buy/sell
signals when divergence from the Index being used is observed and when used
in combination with the New High-New Low Index. </FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV><FONT size=2>Having said all that, 1.5 is a doozy of a number
and will probably be followed by a downturn. I know nothing, but
have little confidence in a return of the Bull for many moons. The
automobile industry with its attendant suppliers such as steel, glass,
rubber, plastics, etc., has been trashed; housing has typically propelled
the new Bull, but housing has already had its own run with little
effect on the overall market. Consumer Confidence would seem to be a bright
spot, but it probably is the result of lower mortgage payments due to
massive refinancing and bargains picked up by consumers at the expense of
the producers, the very folks that we look to for increased earnings.
There's more, but this grows lengthy so I'll shut up. Thanks for your
note.</FONT></DIV>
<DIV><FONT size=2>Best wishes,</FONT></DIV>
<DIV><FONT size=2>Walt</FONT></DIV>
<DIV><FONT size=2> </FONT></DIV>
<BLOCKQUOTE dir=ltr
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
<DIV style="FONT: 10pt arial">----- Original Message ----- </DIV>
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black"><B>From:</B>
<A href="mailto:ianstm@shaw.ca" title=ianstm@shaw.ca>Ian</A> </DIV>
<DIV style="FONT: 10pt arial"><B>To:</B> <A
href="mailto:canslim@lists.xmission.com"
title=canslim@lists.xmission.com>canslim@lists.xmission.com</A> </DIV>
<DIV style="FONT: 10pt arial"><B>Sent:</B> Tuesday, January 22, 2002 12:32
PM</DIV>
<DIV style="FONT: 10pt arial"><B>Subject:</B> [CANSLIM] Panic attack
...</DIV>
<DIV><BR></DIV>
<DIV><FONT size=2>Here's a very interesting recent quote from Peter
Eliades of Stock Market Cycles: "At the end of todays trading, we noticed
that the lowest single day TRIN reading over the past 10 trading days was
1.143. That seemed unusual to us, so we asked the computer to look back
over the past 61 years (since 1940) to find out how many other 10 day
periods had transpired without one single day reading below 1.14. We were
stunned at the answer! The answer is none."</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>The 10 day ARMS index (TRIN) got up to 1.5 again last
week. It used to have huge historical significance in indicating that a
major bottom was to be put in within 20 trading days. It has now happened
4 times in the past year alone.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>I don't pretend to know what it means, but there
certainly has been a considerable amount of panic over the last 2
weeks.</FONT></DIV>
<DIV> </DIV>
<DIV><FONT size=2>Ian</FONT></DIV>
<DIV><FONT size=2></FONT> </DIV>
<DIV> </DIV>
<DIV><FONT size=2>PS - Here is a quick overview of the ARMS index that
someone asked for: <A
href="http://www.equis.com/free/taaz/armsindex.html">http://www.equis.com/free/taaz/armsindex.html</A></FONT><FONT
face=Arial
size=2></DIV></BLOCKQUOTE></BLOCKQUOTE></BLOCKQUOTE></FONT></BODY></HTML>
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