Comment numbers for 20010315:  180 181  

The April-September edition of "The 2001 $upertrader's Book of Linear Time Cycles" will be available in electronic format only (which, of course, can be printed/charted).  A sample of the file may be seen in the NOTICE posred here.  

Here's the ordering information (click)!

(NOTICE of 20001220; of 20010129; of 20010312)

UPDATED 20010315

COMMENT 2001 - 180

1.  The Tuesday, March 13, 2001 edition of "The Wall Street Journal" had a front page article with the following statements about the stock market:

2.  "Stock valuations, based on depressed corporate earnings, remain at historically high levels despite the recent precipitous drops."

3.  Now, there's a news flash!

4.  "While the price-earnings multiple of the Nasdaq has fallen to 154 from 400 a year ago, according to Birinyi Associates, that's still well above the average of 52 since 1985.  Nasdaq stocks would have to drop by more than half just to get back to their recent average."

5.  But, on the way up, before the Nasdaq's PE Ratio reached 400, it had to reach 300.  And before it reached 300, it had to reach 200.  And 100.  

6.  Weren't those also above 52?

7.  "The Nasdaq traded at a price-earnings multiple of just 19 in late 1988, when the most recent Nasdaq bear market ended.

8.  "The price-earnings ratio on the Standard and Poor's 500 is now 24.  By comparison, at the end of the S&P's last bear market, in 1987, the price-earning's ratio was 12.

9.  "In late 1990, when the S&P dipped 19.97% at one point, barely missing the bear market cutoff of 20%, the price-earnings ratio was 14.

10.  "And stock prices were just seven times their earnings at the end of the two-year bear market that ended December 1974."

11.  So there you have it.

12.  Words of wisdom from a Wall Street authority.

13.  The only lesson I can glean from such media banter is that PE ratios are totally irrelevant regarding the question of WHEN one should buy/sell stocks!

14.  It's like trying to anticipate the weather over then next few days by reading speed limit signs on the highway.

15.  Just like the speed limit signs won't tell us WHEN it's going to rain, so a study of price/earnings valuations won't tell us WHEN to buy and sell stocks.

16.  I see where the earnings of Dow Jones & Company is taking quite a hit of late.

17.  Could one factor be the cancellation of subscriptions by clients who've been getting wiped out reading the cheery, but irrelevant, articles of this past year or so?

UPDATED 20010315

COMMENT 2001 - 181

("Prerelease Information" email, Section #2, Trade #s 84 & 86)

1.  When the stock market is in trouble, other markets are usually affected.

2.  Take gold, for instance.

3.  Sometimes, troubles in the stock market lead to a flight to gold as a "safe haven".

4.  Same can affect bonds, bills, notes and so on.

5.  Sometimes the dollar will benefit from such a "quality flight".

6. Tangible markets, such as the ag products, will sometimes sell off sharply on perceptions of declining demand while other times such products will rally in the expectation that increased Fed liquidity will find its way into inflation hedges.

7.  The point is, each such event is different.

8.  At the beginning of 2000, the increased liquidity the Fed pumped into the economy in anticipation of the Y2K event found its way into NASDAQ stocks.

9.  After the Y2K non-event, when the Fed withdrew the liquidity, that sector which was most devastated was the one which had benefited the most on the way up.

10.  Liquidity's been increasing rapidly again of late.

11.  Although it has to find a home somewhere, it hasn't yet revealed its hand with respect to its preference.

12.  It thus becomes of interest to watch the markets which have experienced sell offs of the last few days in parallel to the stock market decline.

13.  The ability of markets which made important lows late last month/early this month to HOLD those lows as the lows are retested during the stock market sell off will be a signal that these markets are DIVERGING with the stock market declines and will be in position to lead on the way up once the stock market expends its downside energy.

14.  Meantime, we focus on Trade #s 84 & 86 of the "Prerelease Information" email, Section # 2, for "The 2001 $upertrader's Almanac - 1st Half Edition".

15.  It appeared, early last Friday, that these markets had made their retest highs and had embarked to the downside.

16.  The late afternoon stock market sell off, however, reversed the early weakness.

17.  Yesterday, the markets made new highs for the last couple of months or so.

18.  Note, however, how the new highs for the year in the one market were not CONFIRMED by the second market as the 20010103 high was not broken (see pages 171-84 of "The $upertrader's Reference Manual").

19.  We've discussed several times how the movement from the 103 high to the 125 low appears to have been a Wave A decline of 22 calendar days (FIBONACCI # = 21).

20.  From the 125 low, the market appears to have rallied 7 calendar days to the 201 high and then declined 15 calendar days to the 216 low (22, again, from the 125 low and 44 from the 103 high).

21.  From the 125 low has been 33 trading days (FIBONACCI # = 34).

22.  The market's thus moved 15+16+17 trading days from the 103 high to the 125 low to the 216 low to the 314 high of yesterday, or an average of 16 trading days for each of the 3 legs of the move (2 X FIBONACCI # 8 = 16).

23.  The movement from the 125 low to the 201 high is believed to be Wave a of B, the movement from the 201 high to the 216 low is believed to be Wave b of B, and the movement from the 216 low to the 314 high is believed to be Wave c of B.

24.  If this is correct, Wave iv of c of B likely occurred at the low on Tuesday, 313 with the Wave v of B high yesterday.

25.  Note that, although the June contract did not make a new high for the year, the perpetual day session contract did while the overnight session perpetual contract did not, thereby enhancing the DIVERGENCE (see pages 171-84 of "The $upertrader's Reference Manual").

26.  Further, momentum oscillators such as RSI and Slow Stochastics are not CONFIRMING yesterday's highs, thereby adding to the DIVERGENCE (see pages 171-84 of "The $upertrader's Reference Manual").

27.  These are critical and most important markets right now.

28.  Let's see if we don't see a top established here and the normal seasonal tendencies reported in Trade #s 84 & 86 of the "Prerelease Information" email for "The 2001 $upertrader's Almanac - 1st Half Edition" begin to kick in.

29.  If the market doesn't stop here, it will probably seek out the 55th calendar day or so from the 125 bottom which occurs on the 21st (see Section #s 13 & 14 of the "Prerelease Information" email).

30.  Finally, it's taking a little longer to get all the emails out (01EMAIL5.txt) than expected, but they ARE coming.

Don't forget to see the above NOTICE regarding the next "Cycles" book if you're planning on using the information therein from April to September.

I've prepared an ascii file of the last trading days, first trading days, last delivery days and so on if you use such information.   Just drop an email and request the "day" file.  DON'T CALL.