|
D.B.
Hi Ike, how are doing?
I.I.
I am doing well, thank you.
D.B.
I would like to start out the interview,
by asking you the same question you have
been asking your guests, since the start
of the New Year!
I.I.
That's quite original!
D.B.
What did you find extraordinary about last
year -in relation to the financial
markets?
I.I.
By all accounts, the latest bear market
was as devastating as any other U.S.
investors experienced in the 20th century.
In all previous incidents, it took several
years after the bear market ended
for investors to warm up again
to equities. However, this time
around, investors regained their
confidence and enthusiasm in a just a few
months. Bullish sentiment -by several
measures- is higher now than in March of
2000. At that time, it had taken 9
years of a an uninterrupted bull market
-1991 to 2000- to get people to be that
bullish, now, it only took 9 months!
D.B.
Some analysts view this as very
bearish, do you see it that way?
I.I.
In the short term, it means absence of
sellers and lot's of buyers which supports higher
prices. The trouble starts when there
is nobody left to buy, and that comes later. The strong
inflows suggest that there is still plenty of
money available to buy stocks. Intuitively, I know
there is a bigger message to be derived
from this, than the usual contrary
conclusion, but I am not sure, I
have figured out what it is.
D.B.
In your weekly commentary for
12-5-03, you were referring to the NDX
weekly chart and you said:
"Notice
that a similar chart pattern for the NDX, accompanied with
similar investor psychology, going into the end of 1999,
resulted in the blow off top in March of 2000. Do the
similarities "guarantee" a repetition? Of course, not.
However, because the similarities are there, as long as price
continues to hold above support, one can not dismiss the
possibility of a break-out."
Since
then, we have gotten a break-out,
does it appear to you that the markets are
about to experience a similar parabolic
move, over the next few months?
I.I.
I do not know, but given the
chart pattern, and the prevailing
psychology, one can not dismiss the
possibility. Take a look at how
investors treated Juniper's earnings
results, the stock was up almost six
dollars. At current price levels the
company sports stratospheric metrics, yet
it made no difference. Investors and
analysts alike, were thrilled with
C.E.O., Mr. Kreins who was so sure of the industry's rising
fortunes on his Thursday afternoon conference call that he even talked up his
chief rival, Cisco. Did it matter that this was the very same
Mr. Kreins who on 1-16-01, said
to analysts attending the conference
following the earnings release the
following:
"Our
guidance wouldn't be going up if we didn't
believe in the visibility that we
have"
Of
course, we all know what followed, so, can
we have any confidence in this
gentleman's ability to correctly assess
the future? Past history suggests; NO! Did
it matter to investors? Of course,
not!
Under
these circumstances anything is possible,
as far as I am concerned. At the moment,
according to all of the indicators that we
follow, the markets are at most 2%-3% away
from either a short, or, an intermediate
term top, unless they go vertical, which
can easily happen. Take a look at our 10
day trading oscillator for NASDAQ.
Since
the bottom in October of 2002, every time
the oscillator got up to present levels,
NASDAQ experienced a pullback between 3%
and 5%. So, I would imagine, that at the
very least we ought to expect a similar
pullback coming from the
2160-2190 zone.
Take
a look at the SP500 in comparison to its
200 DMA. The last time it was 14% above
its 200 DMA, it was at the June top. In a
couple of other cases, it has gone as high
as 17% above its 200 DMA, so, unless it is
about to go vertical, we ought to expect a
pullback taking place from the
1140-1175 zone.
The
30 day Buy/Sell Equilibrium Indexes, also
indicate that Buying Pressure, is becoming
climactic, and thus, it should subside
shortly.
D.B.
How about the volatility ratios, what are
they telling us?
I.I.
There has been only one time, that the
ratios have been higher than now, and that
was in August of 2000.
In
this business we go by the odds. Based
upon the entire past history of
these ratios, the odds suggest that the
indices are about 2%-3% away from a short,
or, an intermediate term top. Can they go
vertical instead? Yes!
The
same conclusion is supported by the rest
of our indicators.
|
