Go to Jeff Salisbury LWGate Home Page.From: Spencer48@aol.com
Subject: [CANSLIM] Re: The Market Trend Is The Major Important Factor In This Market
Date: Sat, 11 May 2002 23:59:20 EDT
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Eric:
I have a feeling that the short/intermediate lows are not going to be
seen until there is less advisor bullishness (as delineated in the
Psychological Indicators in The Big Picture). I don't believe there will be
enough "blood in the streets" (ie. pessimism) until the "bull/bears" in the
advisor graph AT LEAST cross each other.
The puts/calls and VIX are just too short term to indicate when a bear
is over (ie.there will be many bullish indications because a bear trend may
have many bull corrections). However, to understand when a bear trend is at
an end, you need a longer term indicator. For intermediate term Sentiment, I
believe The Bull/Bear Advisors is a good one.
jans
In a message dated 5/10/2002 5:49:25 PM Eastern Daylight Time,
ericjaenike@yahoo.com writes:
<< Wanted to point out a couple of things re: M. The most recent low of 5/7
was not accompanied, IMO, with the type of price/volume activity or sentiment
indicators that normally accompany a sustainable bottom. While we started
accelerating to the downside, we did not get to the point where the selling
pressure was finally spent. Note the decreasing volume from May 1-6 (focusing
on the Nas) as the index slid. May 7 saw an increase in volume, but downside
stalling as the index barely closed down. Also note that while sentiment
indicators (focusing on put/call and bullish/bearish measures) moved in the
direction of extremes associated with a true bottom, they did not actually
achieve those extreme levels. Now, we have a distribution day appearing in
the indexes at the beginning of the nascent rally, indicating that selling
pressure still exists. This supports the conclusion that the activity in the
last few weeks was insufficient to clear all the sellers out.
Of particular interest is the activity on the Russell 200, S&P 400, and the
IJS (which tracks the S&P 600 Barra value subindex). These smaller cap
indices are starting to underperform and experience selling pressure. This
indicates that we are entering "the beginning of the end". By that, I mean
that the selling pressure is finally hitting the last pockets of strength in
the market: smaller cap stocks, including small cap value. Typically, a bear
will attack the weakest groups first, then move one by one through each
remaining pocket of strength until most or all groups have been taken down.
To me, we appear to be entering that stage.
I consider this to be a bullish development. We need, IMO, to clear the
sellers out to finally get to the point where we can have a solid bull run.
Of course, individual stock positions need to be managed based on the
activity of that position, but I would keep the weakness in these smaller cap
indices in mind.
FWIW.
Eric >>
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