Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Windows to 1998

By

PrintPRINT

I was reading Toddo's Random Thoughts and saw the one with the IM to his college roommate regarding a potential market meltdown. That made me think some more about the timing for a more serious decline. Looking back again to 1998 can be instructive here.

Below is the current sector bell curve alongside the bell curve from April of 1998. As I've written before, the NYSE Bullish Percent indicator is above the 70% level for the first time since April of 1998.



What happened to the broad indices when this indicator reversed down in May of 1998? Not a whole lot, actually. It wasn't until the end of July that the market decline in 1998 really gathered steam. By September of 1998, as the Bullish Percent indicators found their lows, the sector bell curve looked like this.


As Toddo pointed out to his college roommate, no one really knows where the exact top or bottom is: "I think we're getting close to a market melt. don't know if it's here, up a few hundred points, a month out or whatever...".

Since we don't have a crystal ball, all we can do is use our judgment, and perhaps some risk indicators and measures, to choose wisely about how we want to be positioned based on what we perceive the risk to be at any given moment. Now, just looking at the sector bell curve risk measures above, where would you rather be buying stocks, and where would you rather be selling stocks?

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE