Mon Sept 13


DOW weekly chart Fri Sept 10 inclusive.

In early 2007 my long term indicators first warned of a very
overbought market which was confirmed by the serious sell off in
July that year. Warnings of a major correction continued during
2007 which were confirmed in late 2007/early 2008 when the
bear market started.

Something similar is occurring now ie. another very overextended
market. Bearish warnings from medium and long term indicators
have strengthened further.

Similar to the increased chart warnings in the first half of 2008,
I fear another major sell off may occur and won’t be surprised if
we get another waterfall crash similar to late 2008.

The analogy of a pendulum can be used to explain this
overextended market. When moved a small amount from it’s
vertical equilibrium position and then released – the reaction is
minimal. But when the pendulum deviates substantially from it’s
equilibrium position and released – what happens ?

From a medium and long term perspective, the deviated pendulum
has repeatedly been prevented from returning to it’s equilibrium
position. Market corrections in 1987, 1998, 2000, 2007-2008
however, warn that a substantial reversion to the mean will occur
and the longer it’s delayed – the more disorderly it will be.

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I read comments but they're not published. Troll IPs are automatically trashed. [crinia AT gmail DOT com]

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