Replies to post #7690 on A.I.M. Users Bulletin Board (AIMUSERS)

[OldAIMGuy]

Hi J, You are seeing the IW as I do, an indication of a market that is over-sold. This may not end the bear market, but it should give us a chance to have some profitable trades once the corner is turned.

Much of the spike up in Jan. of the IW's reading is attributable to just one component, the Speculation index. It looks back on a 13 week time frame to see what the percent change in prices have been in the top and bottom 41 stocks in Value Line's 1700 stock universe. Because of the severe sell-off in early October, this index was giving comparisons in Jan. that made it look like massive speculation. In fact, it was just "recovery" to levels prior to the Oct. sell-off.

Now that this statistical peculiarity has passed, the overall IW reading is settling back down to where it might have been anyway. The biggest single change this week was the decrease of the Value Line P/E from 15.0 to 14.2. This helped to send the raw data heading deep into the Low Risk territory.

I'll post all four component's graphs in this week's newsletter later today.

Thanks for the comments,
Tom

[Bernie Goldberg]

Hi J,
O'Higgins may have been too far ahead of the curve for you to have noticed him. Check out his first book "Beating the Dow" published in 1991.
In 1998 he was quite prescient with "Beating the Dow With Bonds" a followup to his first book.
I followed his advice with some of my portfolio. If only I had done more so.
Bernie