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You confirm almost everything that I have
stated. Bull or bear is in the eye of the beholder. It is strictly
dependant upon what time frame one is looking at. The market which is
bearish on a 15 minute chart can be bullish on a daily chart and that bullish
daily chart can be nothing more then a retracement of a very bearish down
move. Any individual can define bull or bear. Look at the daily
charts for the techs and most of them are in bullish moves having doubled
tripled or done even better off of their lows. Then look at a weekly or
monthly chart and tell me if a stock that was $80,$100, or $300 3 years ago and
is currently trading below $20 is bullish looking on a chart. Trading is
dependant upon the individuals trading methodology. So bull or bear
depends upon the time frame the trader is trading and has very little to do with
what has been going on for the past 300 years. I now know that the Dow can
fall to 5000 and still be in a 300 year bull market. I also know that I
can trade that retracement for 4000+ points as a contra trend trade.
You can do the same thing for the Yen or the Swiss
Franc. Go back to when the Yen was 450 to the dollar and when the Swiss
Franc and D Mark were worth 25 cents and tell me that there has ever been a bear
market in those currencies or whether the retracement of the bull move is
over. Has the British pound ever been in a bullish move.
Go back to when the Pound was worth $5 and then dropped to just about $1.
Is the move from a $1 to $1.65 a bull move? Only if your time frame is
right.
In trading you have to understand that charts are
like a magic trick. There are moves within moves, and depending where you
start and where you end, there can be many moves. I can be short and
someone else can be long the same item and we can both be profitable if we are
trading different time frames and different cycles. So if you say short
this or that or go long, state what time frame you are talking about. I
can look at the same chart and I always see two moves. One up and one
down. I try not to have an opinion, because every time I have one it costs
me money. Price will tell you which way it is going and it is never
wrong. It is the traders time selection that is usually the
culprit. Good trading, Ira
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----- Original Message -----
<DIV
>From:
Tony
Pylypuk
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="">realtraders@xxxxxxxxxxxxxxx
Sent: Tuesday, November 18, 2003 4:53
PM
Subject: Re: [RT] INDU
Hi Ira,
I thank you for the compliment regarding the 103
(almost 104) year chart.
Both the 4 year chart and the 103 year chart are
semi-logarithmic. As I am sure you are aware, semi-logarithmic plotting
allows for the comparison of 1 point moves in a 100 range market, 10 point
moves in a 1000 point market, and 100 point moves in a 10000 point
market.
I am puzzled by your statement that the market is
still a bull, for a couple of reasons.
First, as you noted, it is necessary to define
the time frame within which one makes that statement. If that time frame
is 4 years, then clearly this is a bear market, and as John Bollinger has
noted the current upswing is a secular bull market within that larger bear
market. I suspect the secular bull is over.
Second, if that time frame is the period from the
lows of 1974 (or by my charting from the lows of 1982), we are still in a bear
market as we have penetrated the downside of the channel or channels which
could reasonably define the upward movement during that time
frame.
If, however, we define the bull market as being
those levels of the DJIA which do not fall below the line drawn between the
lows of 1932 (if memory serves me) and 1982, then we may still be in a bull
market, and you would be correct in stating that a 50% +/- reduction in the
DJIA to meet the 103 year support trend line would not negate that bull market
- but the "bull" market in those circumstances would be far
different than what the investing institutions and general public have come to
accept.
I quite agree with your observation that the
DJIA of 1920 is different from the DJIA of 1950 and from the DJIA of
1980. Other than semi-logarithmic charting, I do not know how one could
conceivably adjust for the replacement of buggy whips with ignition keys,
or the replacement of manual scribes with word processing, or any other of a
myriad of technological changes which we have experienced, let
alone the repeated re-calibration of the DJIA.
As to your question regarding the data, it is raw
DJIA data for all periods as supplied by Reuters through MetaStock. As I
understand the data, it is the DJIA as it has been recorded
historically.
Having said all of that, it is interesting to
observe that the DJIA appears to have "bounced" upward off of the mid-point of
the 103 year channel. That mid-point of the 103 year channel and the
upper bounds of the 4 year bear channel are
currently the operative factors (ignoring Fibonacci retracements and other
technical measures).
Perhaps a creditable hypothesis can be posited
for the acceleration of the DJIA from the lowest lows of the last 4 years to
new highs well in excess of 12000.
But on the basis of my charts, I remain to be
convinced.
FWIW,
Tony Pylypuk
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