john magee technical analysis::delphic options research ltd    

And no sooner were the words out of our computer than everyone who was afraid of missing the bottom rushed in to buy the bottom and position themselves for the next bull market. The bear market will not end until all the fund managers have capitulated and stocks have moved to strong hands. The NASDAQ led the way up. And the way down.

Once again the price of ignorance of trend analysis and the folly of impatience is demonstrated.

Our full analysis, Major Turning Points 3 will be available shortly. See Paid Services. For the moment, if the low (note, "low") at 7500 is taken out the bears will be picnicing for some time. On the menu: toasted fund manager.

Attempting to buy the bottom here will be like trying to catch the falling knife. Intelligent Magee chartists will let the paniced and the greedy kill each other off and mop up the carnage later when a bottom has formed. Next, real estate.

If the formation from 98 to 02 is a head and shoulders, a possibility, then the S&P could be headed for 480.

Eerily like 1929.

A bull market that died hard. That actually was dead for some years, unbeknownst to those unfortunate fundamentalists who can't read charts. And the naive, analyst misled. It would be interesting to us to know how many of our readers read our letters and didn't act. Next time of course they will and that will be the time we make a mistake. Sigh. The Dow is shown from the beginning of the present down trend. Line charts of the qqqs and S&P are shown to dramatize the situation (if that is needed). As we have remarked the qqqs look like the chart of 1929 Dow. Neatly answering the question, can a market take back more than 100% of its base? In case you are curious as to where we think the base of the S&P is it is between 400-480.

We have repeatedly asserted that this was not a market to be long of. For three years (since .82 to the dollar) we have been saying investors should get long the Euro. So much for prophets being without honor. We are now considering and writing a letter on where investors should hide now. If you guessed real estate guess again. The new letter, titled "What to take to relieve the hangover: Investment Policies for the post debacle." Interested readers should email edwards-magee@edwards-magee.com to be informed when the letter is ready.

Chastened readers who may now see the simple power of technical analysis and are willing to go back to the drawing board (or school) can examine our seminars this site, or email ejosias@ucd.net.

Long term investing: (from our comments of Jan 01) We see no reason to change these comments this week. Isn't that boring?

Dow: The Dow can expect to find support at 10000 and is buyable, but in small commitments or portions of a portfolio or additions thereto. We expect to see it in a very large see saw from 9-12000 for some time and would hedge at the high end and increase commitments and lift hedges on oversold conditions at the low end. Jan 15: Don't hang up. We change our minds everyday according to the conditions of the moment.

S&P: We have pretty much the same opinion about the S&P with the range being 1200-1500 and would follow the same strategy.

NASDAQ: This thing is on wheels--either that or a Roman candle (not referring to candlestick patterns, but to the fireworks.) Can you buy it? if you're faster than a scalded skunk. At least there is a line of defense about 3700. But it's definitely playing with fire.

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