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Minyan Mailbag

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I like this guy!

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I've gotten alotta feedback from the Minyanship regarding yesterday's bubble blurbage and, in the interest of objective perspective, I wanted to share this particular note.


Toddo,

I know you have received a lot of mail about your friend's comment on the new bubble. I'm sure no one really believes it could happen but there is some graphic evidence to support a move much larger than most believe possible. If you pull up a weekly candle chart on Bloomberg of the Dow from 1/1/27-12/27/35 and compare it to the NASDAQ. Use 1/1/98-1/23/04 as dates for the NASDAQ. The charts are so close that it's scary. Then look at the Dow into early 1937. If the correlation holds we could have another 25-30 percent on the upside in the NASDAQ. Of course then we head to new lows!!! While this percentage gain is hardly a "bigger" bubble, it would take out what's left of the short base. Comparing the Dow and the NASDAQ may seem stupid but in the 20's a lot of the Dow were growth companies. Just food for thought."

Thanks,
JK


I pulled up these charts (and, with luck, we'll get 'em up for the Minyanship in time) and the correlation is, indeed, spooky. While I firmly remain in the furry camp, I wanted to offer this view as another perspective. You always want to look at both sides of every trade in an effort to understand the thought process of your counter-party. Take it for what it's worth and with a grain of salt. Thanks!


Randoms: Keep an eye on a one month chart of the NDX. If we continue to edge sideways, it might set up some reverse dandruff. NDX 1480 would negate it (and pave the way to 1450-1460) while an upside breach will likely tag NDX 1515-1520. So ya know and if ya care!
position in qqq

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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