gs
http://xtrends.blogspot.com/2009/05/there-goes-mother-goose.html?dsq=9143335#comment-9143335The
Today the ratio adjusted NYSE McClellan summation index crosses 1200, so I thought I would look back on Decision Point back to 1928 to see if there was anything to be gleaned. Out of all the instances when the summation index was above 1200 only two lead to any declines of substance during a bear market , but I did check all readings above 1200. I found only two times that there were anything over 10% declines and they were in 1940 & 1941. A decline in 1940 started one month after the reading and lasted 6 months and was a decline in the 16%-17% range while in 1941 it was coincident with the top and lasted 7 months and was around 28%. While I expect some kind of 9 month low in July, it would seem that any decline that materializes from a trading top in the next few weeks has very little risk of turning into anything more than a normal retracement. If something more problematic were to develop it IMHO will have to wait till later in the year or in 2010.
Today the ratio adjusted NYSE McClellan summation index crosses 1200, so I thought I would look back on Decision Point back to 1928 to see if there was anything to be gleaned. Out of all the instances when the summation index was above 1200 only two lead to any declines of substance during a bear market , but I did check all readings above 1200. I found only two times that there were anything over 10% declines and they were in 1940 & 1941. A decline in 1940 started one month after the reading and lasted 6 months and was a decline in the 16%-17% range while in 1941 it was coincident with the top and lasted 7 months and was around 28%. While I expect some kind of 9 month low in July, it would seem that any decline that materializes from a trading top in the next few weeks has very little risk of turning into anything more than a normal retracement. If something more problematic were to develop it IMHO will have to wait till later in the year or in 2010.
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