Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

I was asked in a private message to comment on Markman's excessive optimism (#msg-5126546, read Markman before you read my comment below) and how it relates to my short term optimism (2275) but a coming nassacre following that. Since this is really of much broader interest, and I spent quite some time to back up my thesis, I thought I should make my reply public, here is a copy:

In one of my recent posts (#msg-5129211, and in that post, I erred and meant 10% or less above their 10 DMA, not under), I mentioned the paucity of stocks above their 10 dma as an indicator of an impending rally. However such strings surely are lousy LT indicators, look at #reply-16433472, a string post 9/11/2001 preceding a nice run into January prior to Nassacre 2002. Or the minor local April 2001 bottom (#reply-15677769) signalled with few extreme 10 dma readings, just to peak next 5/22/01. Note in the sox, such a string in early June and July 2002, also followed by a failing ramp (#reply-17699443) on 8/22/02. Many other examples where the 10 DMA was an excellent forecaster of an impending failing run. It is also important to look at when this becomes excessive in the 85%+ range, typical of an impending top. But I still have not found one single indicator that is "good all the time", and Markman's reliance on that one in face of very bullish advisors and generally low epc, is an error, IMTO.