Bem, nunca li nada de tão claro, de tão sincrético, de tão simplista e..de tão frio. E contudo, está tudo dito! (para bear market - make some money and run away and come back in another day; para bull market - Let the Money work every single day)
Aqui:
I started as a fundamentalist, gravitated toward technical analysis and ultimately developed my own strategy based on the theories of Vilfred Pareto. Pareto was a 19th century economist who described the 80:20 principal after discovering that 80 percent of the wealth in Rome was owned by only 20 percent of the people.
His 80:20 theory is widely used in business and frequently referred to as the "Vital Few (20 percent)" and the "Trivial Many (80 percent)."
The Vital Few are corporate insiders.
The Trivial Many are market letter writers, the media (especially financial television programs), and the public.
What the trends say
It is relatively easy to monitor both. When they are at opposite extremes, the stock market always moves in the direction of the Vital Few.
A buy signal occurs when insiders are bullish and sentiment (market letter writers), the media and public opinion are bearish.
A sell signal is when the reverse is evident.
With those concepts in mind, let's review the three recent market bottoms and the last two tops to help answer the question: A new bull market or another fake-out?
July 2002Bottom Oct. 2002 Bottom March 2003 Bottom
Insiders Bullish Bullish Bullish
Media Bearish Bearish Bearish
Sentiment Bearish Bearish Bearish
Public Bearish Bearish Bearish
Conclusion BUY BUY BUY
Vs.
August 2002 Top December 2002 Top Current Picture
Insiders Bearish Bearish Bearish
Media Bullish Bullish Neutral
Sentiment Bullish Bullish Very Bullish
Public Bullish Bullish Neutral
Conclusion SELL SELL SEE BELOW
From 1966 to 1982, a period of 16 years, the stock market traded in a range between 600 and 1,000.
Just as Dow 1,000 was a barrier then, it is possible that Dow 10,000 may also prove a long-time barrier.
From 1966 to 1982, there were 13 great buying opportunities. Eight occurred in October-November, four in May-July and only one took place in March.
Since the probabilities favor a major bottom in either May-July or October-November, and in light of the developing sell signal based on the above indicators, my advice is to take profits in extended stocks now and place close stops on all other long positions, except long-term core positions.
Since my analysis suggests the next low will be the low everyone is looking for, I recommend one start to prepare for the next bottom.
If the July, October and March lows are taken out, it will be easy to get caught up with the negative sentiment and become too frightened to buy. As Abe Lincoln once said, "I will prepare and some day my chance will come."
(para bear market - make some money and run away and come back in another day; para bull market - Let the Money work every single day)
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