Re: [CANSLIM] Market psychology

From: "Bill Triffet" <btriffet@earthlink.net>
Subject: Re: [CANSLIM] Market psychology
Date: Tue, 23 Jul 2002 15:52:01 -0700
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Katherine,
You beat me to the phrase,"The market can scare you out or wear you out". I
guess this time it will wear us out (did for me - been out for several
months now). Also, the element of the secondary contrarian indicators
signaling a bottom was brought up in today's IBD backpage editorial. To
paraphrase: "If everyone's a contrarian, where are we left"? Everyone's
quick to jump on each move of the put-call ratio. Also made note of the fact
that fund managers have had a hard time liquidating the huge numbers of
stock shares in this market. They kill every new rally trying to dump a few
million more shares.

Maybe the last bull made too many canslimers of us. Perhaps we need some to
convert to "value" selection to take the ball for a while?

- -Bill


- ----- Original Message -----
From: "Katherine Malm" <kmalm@earthlink.net>
To: <canslim@lists.xmission.com>
Sent: Tuesday, July 23, 2002 1:44 PM
Subject: Re: [CANSLIM] Market psychology


Interesting perspective, isn't it Jon?

While history doesn't always repeat verbatim, little changes in human
behavior. I think those two significant Bears ended once everybody was bored
to tears with the market. What is the saying?.... "sometimes the Market just
wears you out...." :)) Add that to Bill K's comment about needing several
months to find a bottom and you've got the makings of new Market
"potential."

Katherine
  ----- Original Message -----
  From: J. Lobatto
  To: canslim@lists.xmission.com
  Sent: Tuesday, July 23, 2002 3:14 PM
  Subject: Re: [CANSLIM] Market psychology


  Katherine,

  Thanks for that reply. Very interesting to note that the two most
sustained bears of the century did not end on obvious capitulation.

  Jon
    ----- Original Message -----
    From: Katherine Malm
    To: canslim@lists.xmission.com
    Sent: Tuesday, July 23, 2002 4:11 PM
    Subject: Re: [CANSLIM] Market psychology


    Hi Jon,

    Here's a point of view on the notion of capitulation from an excellent
technician and market veteran, John Mendelson. It's awfully hard to say how
the market will find its bottom, and it's very possible that we may get some
"false" FTD's. But I do know with certainty that there will be no
sustainable upturn *without* a FTD.

    Katherine

    =========

    Weekly Market Analysis

    John A. Mendelson

    July 23, 2002

    A View Of The Market

    Some Recent Questions From Clients:

    Do you expect to see a capitulation by investors before this decline
ends?

    The prospect of capitulation, or a climatic downward trading spike that
exhausts the selling,

    appears to be very much on the minds of many, particularly the financial
press. The "need" for this

    has been mentioned in numerous articles.

    First of all, nobody knows for sure if this event will occur. We have
clearly seen an

    acceleration of selling in the last two weeks that has moved the market
to an extreme extended or

    "oversold" position. In this regard, 99% of the stocks in the S&P 500
(SPX - 820) are below their

    ten-week average, a higher percentage than September 2001 or October
1987. Furthermore, actions

    reflecting investor sentiment such as the CBOE Put/Call Ratio, the
ten-day average of the Arms

    Index (TRIN - 1.67) and the NASDAQ Trin (TRINNASD - 0.62), measures of
buying and selling

    pressure on the market, and my proprietary "Diaper Indicator" all are at
or near historically extreme

    levels, as is the CBOE OEX Volatility Index (VIX - 48.23). Furthermore,
NYSE short interest is

    now the highest in history and the dividend yield on the S&P 500 is
higher than that of six-month

    U.S. Treasury bills, a most unusual event in modern times.

    My point is that one might say we have already had a "capitulation." I
would also note that

    the 1973-1974 bear market, the worst I ever saw, ended on October 3,
1974 with a "whimper, not a

    bang" after twenty-one months of slow death on low volume.there was no
capitulation. In

    addition, the 1929-1932 bear market bottomed on July 8, 1932 on volume
well below many days in

    the prior two months. Who knows? . my personal view is that investor
capitulation is not

    "needed" to form a bottom and that many sentiment indicators are at more
extreme levels than at

    previous historic lows.

      ----- Original Message -----
      From: J. Lobatto
      To: canslim@lists.xmission.com
      Sent: Tuesday, July 23, 2002 2:59 PM
      Subject: [CANSLIM] Market psychology


      All the professionals are looking for a massive capitulation day to
mark the termination of this bear market (i.e. an obvious panic day when
they can start pouring money in). Using the fact that the market rarely
satisfies the majority of participants, I suspect that the professionals may
not get their wish. As such, one other scenario comes to mind:

      The market continues this relentless water torture for an
indeterminate amount of time and finally the bear market ends at some point
with a whimper barely noticed by anyone, that is a new low is made on a
fairly "normal" day and the market starts climbing back up the next day,
either A) explosively or perhaps B) gently and imperceptibly and basically
doesn't look back from that day on.

      Any other non-capitulation scenarios that any of you can come up with?
The reason I ask is that with my "B"scenario, we may not get the FTD day
that will ring the bell for us either.

      Jon



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