DOW Crashing ?!

Unfortunately, there is still alot of downside potential left in the S&P 500 and the DOW. I see it either as a replay of the markets from 1966-1982 or as the 1930's in the US and the 90's in Japan.

From the 1966 to 1982 period, the DOW was flat. But because of raging inflation during this time, you lost 3/4 of your money if your investments were returning 0% a year. This market period had many rallies and the DOW managed to break 1,000 a few times, but it was a sideways/bear market for the better part of 16 years.

Contrast that with the 30's and the 90's in Japan. These markets witnessed one big speculative top form, followed by a crash, and then a lull for several years at the bottom.

If you look at the market cap to GDP ratio, low dividend yields, high p/e ratio's, low cash levels at mutual funds, etc....I think it's possible the DOW could crash through the Sept '01 low and settle in a new trading range of 6,000-8,000. The NASDAQ could conceivably stay between a 1,200 to 2,000 trading range for the entire decade.

Until I start to see massive redemptions of mutual funds, we're not even close to the end of this bear market.
 
I wonder where the 8th page of this thread disappeared ?
Does anyone have any recent sentiment indicators figures ?

Bono
 
yes guys, I agree .. but the thing is we mentioned the 'Contray Theory' here earlier, and the pages seem to have been deleted by mistake by a moderator or something ...

anyway, someone posted a message showing that investors sentiments are in favor of the Bulls ... I think the post said that Bulls constitute 53% and Bears 29% ... which negates the contrary theory ... i honestly think that Elite Trader could be a very good indication and obviously everybody here seems bearish .. so I was wondering if someone could post some recent sentiment figures such as the put/call ratio, or anything similar ...
 
somebody earlier was talking about the dow not being as significant as the s&p. He has a point , but there is also the fact that the Dow stocks are all heavily weighted components of the OEX and the 500. Also, the dow has been stronger than the rest of the market so far this year. If the dow starts to tank then I think the OEX and the 500 should also, although it is more likely to happen in reverse, i.e. the oex and 500 tank and then the dow tanks. But hey, i don't actively trade the indexes so they are just indicators to me or ways to hedge a stock portfolio.
 
Mike,

Thanks a lot ! I got it.... the put/call ratio stands at 0.73 on 31 May 2002 ... which clearly confirms earlier figures and shows that traders are indeed bullish ... so WATCH OUT guys !!!
 
ask different traders what that means and you'll probably get 2 different answers...


1. The market is way down and has been going down for weeks.

2. The market will go down further.


Most traders fall into category 1. They have no idea where the market is going and are scared to take a position based on the current trend. They would rather try to pick bottoms because the reward (if they get it right) could be much greater. It's a gambling mentality. How do i know? from experience!

Elite traders fall into category 2. They use some type of analysis to form a bias, then they fearlessly enter the market to execute based on this bias. Dare I say I know this from experience? Yes i do.

The difference between the 2 attitudes is the willingness to stand behind ones opinion.

It's not that important whether you pick bottoms, or go with the trend... it's the firmness of the traders opinion that matters most. If you can execute your ideas without being wishy washy, and be disciplined with exits, you will eventually get your entries right...

By the way, all traders pick tops and bottoms... trend traders just do it in the context of the current trend. ( and they call people who reverse that "trend" bottom pickers, who are themselves actually playing larger trends) Even if the trend is down, you can't just short... you have to short at the top of a little rally, otherwise you take on alot of risk, little reward, and the big chance of getting stopped out. So everyone gets their hands dirty, but the wishy washy ones never get it right... the ones who stand in front of the freight train will eventually get it right.

I'm not talking about the train of the trend, because as i said above, all trends are relative... I'm talking about the freight train of the mind. The frieght train of fear and greed... if you flow with it, you lose, if you step in front of it you will eventually win.

:)
 
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