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Thread: Where Did Market Volatility Go?

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  1. #8
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    Default Re: Where Did Market Volatility Go?

    EJ,

    I ran across a report that I think arrives at the same place you may be in your thinking, but by a different route.

    The first article http://www.financialsense.com/editor...2006/1019.html had a link to a previous one http://www.financialsense.com/editor...2006/0517.html dated 5/15/06. Both are by Bob Bronson.

    They are long, and I did not read every bit of either. In the second of the above links, Bronson writes of bear market supercyles and points out what he call the "top of echo-mania" highs. Perhaps what could be the picture if such a cycle were in play now is copied below from his second link.
    This label accompanied the image. " In the Supercycle Bear Market from December 1968 through October 1974, as seen in the chart below [above], the stock market made “all-time new highs” at the top of its echo-mania (B) cycle-trend." He analyzes a number of similar events. This is showing the bear-market "bounce" exceeded the previous bull market high, a picture similar to what may be happening if one looks at the DJI, which it seems a lot of people are.

    The first link contains Bronson's arguments dealing with conflicting reporting of when recessions begin and end. One conclusion: "
    With all the data revisions and other strong analytic support for a change in the dates of the last recession, it is obvious that the previous recession was worse in both duration and magnitude than previously acknowledged, just as Bob Bronson had forecasted. Current economic data, as well as history, also suggest that the incipient recession will be even longer and deeper than the last one since, among other recessionary factors, it will be associated with the more severe, second downleg of a Supercycle bear market. It certainly will be far more severe than the current consensus of economists, and far more severe than investors have yet priced into stocks."

    I also found of interest his impression in the last three segments of the first link.
    a: New Highs In The Dow Are Not Bullish in which he pointed out referencing the 1973-74, "The whole irrational, new-highs affair proved to be no more than a relatively short-lived sucker’s rally at the end of a lengthy bull trap." This section is worth reading
    b: The Dow Is A Defective And Misleading Measure Of The Stock Market
    c: Declining Oil Prices Are A Reliable Indicator Of A Recession

    For anyone feeling exceptionally bullish now, these articles might offer cause to reflect carefully on whether to be seriously long these markets.
    Last edited by Jim Nickerson; 10-20-06 at 01:59 AM.
    Jim 69 y/o

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