本文发表在 rolia.net 枫下论坛By now you can see my answer to the question asked in the headline, "Is the bull market dead?" That answer is an emphatic "no!" The bull market is very much still alive, in fact stronger than ever. The IBES Valuation Model has come close to a record undervalued reading at the bottom of the latest correction. Bull markets don't end like this, they *begin* like this!
The latest "fear fad" circling the Internet is the so-called Dow Theory "sell signal." The idea behind this misconception is that because the Dow Jones Transportation Average has made a lower low compared to the August correction low, a bear market is imminent.
This is a faulty understanding of how the Dow Theory works. The Dow Transportation Average gives its best signals when it confirms the Industrials. Just because one index makes a lower low while the other doesn't should not be interpreted as a sell signal at face value. History will show you numerous instances where the Transports made a lower low at a correction bottom, only for the Dow Industrials to go on to make higher highs. The October 1998 correction low was one such instance.
This is one problem with embracing a purely technical approach to the market: you can never rely with absolute confidence in any system that looks at the action of price only to the exclusion of everything else. If all I had to go by was the Dow Theory, I suppose I'd be feeling very bearish right about now, too. But we know from experience that price alone (or even price and volume) are insufficient to understanding the underlying strength or weakness of the stock market. It's a combination of price, internals, psychology and valuation that determine whether the stock market stands on solid ground or sinking sand.
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The latest "fear fad" circling the Internet is the so-called Dow Theory "sell signal." The idea behind this misconception is that because the Dow Jones Transportation Average has made a lower low compared to the August correction low, a bear market is imminent.
This is a faulty understanding of how the Dow Theory works. The Dow Transportation Average gives its best signals when it confirms the Industrials. Just because one index makes a lower low while the other doesn't should not be interpreted as a sell signal at face value. History will show you numerous instances where the Transports made a lower low at a correction bottom, only for the Dow Industrials to go on to make higher highs. The October 1998 correction low was one such instance.
This is one problem with embracing a purely technical approach to the market: you can never rely with absolute confidence in any system that looks at the action of price only to the exclusion of everything else. If all I had to go by was the Dow Theory, I suppose I'd be feeling very bearish right about now, too. But we know from experience that price alone (or even price and volume) are insufficient to understanding the underlying strength or weakness of the stock market. It's a combination of price, internals, psychology and valuation that determine whether the stock market stands on solid ground or sinking sand.
全文见连接更多精彩文章及讨论，请光临枫下论坛 rolia.net