Friday, March 16, 2007

"grey tuesday" panic selling in perspective from 1949 on

what a chart! i differ with the writer who is in part bullish (because no hedge funds has blown up so far, no market top in sight, etc) especially his argument
Given that the amount of equities held by households (as a percentage of their total and financial assets) is only at its 54-year average - there is still a lot of potential for further accumulation of U.S. and international stocks by U.S. households. The U.S. cyclical bull market lives on...

with cash at lows? is very weak (see chart from contrary investor)

to read his thesis click on the headline

netter chart. überflüssig zu sagen das ich nicht mit dem autor übereinstimme der weiter bullish bleibt. seine argumente klingen ziemlich dünn. dazu bitte auf die überschrift klicken.

The Arms Index is named after its designer, Richard Arms. It is also known as "Trin," which stands for the "Trading Index." The Arms Index compares two of the markets key "internals." The first is the relation of advancing issues to declining issues (stocks up at least a penny on the day versus stocks that have declined at least a penny.) Meanwhile, the second is the relation of advancing volume to the declining volume (the total volume of all stocks that closed higher on the day versus the total volume of all stocks that closed lower).

As one can see from the above chart, the selling that we endured on the U.S. stock market during February 27th and the following four days was one of the most intense in history. Not only was this apparent in the U.S. stock market, but all around the world as well as the major global market indices plunged. At the height of the selling, money managers in Asia were remarking that they have not experienced this kind of selling intensity since the height of the Asia Crisis in October 1997.

.......More encouragingly, there were no hedge fund "blowups" during the latest crisis - despite the intensity in selling on February 27th (the NYSE ARMS Index closed at 15.77 that day - the highest reading since the 30.76 reading on September 26, 1955 - the Monday after President Eisenhower's weekend heart attack). Moreover, there were only six prior instances of an ARMS reading above 15 since January 1940 - with one of them coming during the Fall of France, two of them during 1943 (when it seemed like the Allies were losing World War II), and two more during 1946 when the 1942 to 1946 cyclical bull market was in the midst of topping out. For comparison purposes, the NYSE ARMS Index hit a level of 14.07 during Black Monday, on October 19, 1987

10-Day Moving Average of the NYSE ARMS Index (January 1949 to Present) - 1) Eisenhower heart attack and aftermath 2) 1987 crash and aftermath... 3) The darkest days of the 1997 Asian Crisis... 4) The bursting of the tech bubble and aftermath... 5) The darkest days of the 1973 to 1974 bear market... 6) The crash that ended the *-tronics* boom in 1962 7) The panic selling on February 27, 2007 and aftermath...

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