Subj : Market Action To : All From : Paul Rogers Date : Mon Feb 03 2003 05:47 pm

One of you sent me this.

>Found this in my Bottom Line Reports. It was written by K.C. Grainger,
>former Wall Street analyst.
>
>"There could be much more pain ahead for U.S. Stocks, given the
>comparisons between GDP and market valuations. When the value of any
>country's stocks exceeds 75% of its GDP it means that stocks are greatly
>overvalued and the market is due for an extended slide. The 50 year
>average stock valuation is 52% of GDP--but even with this bear market US
>stocks are now at 92% of GDP. In 1929, the stock market peaked at 123%
>of GDP and didn't recover until WWII. In March 2000, US markets peaked
>at 182%. Strategy: Money still can be made in stocks, search for
>undervalued small and microcap stocks"
>
>Thought it was interesting.
>

As you know, my attitude is still cautious for the next year or two.  On
a purely technical analysis level I don't see any indication that we are
out of the Bear Market even yet.  I am worried that another year or two
of this may cause a downward spiral and have an exceptionally hard
recovery.  I said when the Fed began reducing rates that it was an
inherently limited remedy that we couldn't depend upon, but that's all
we did.  It isn't clear to me that the present administration will be
able to overcome its dogma and implement the practical necessities to
restore the economy to traditional growth rates.  These deficits will
soak up a lot of future growth.  But there is no decision for us to make
on the administration for another 18 months.  No matter, CYA (cover your
assets).  I'm hopeful the next administration, no matter who it is, will
be much more focused on the economy.

However, I disagree with the sufficiency of his analysis.  His model is
too limited.  In today's world the American economy is the dominant
international economic driver.  It would make more sense to me if he did
a world-wide analysis, and account for transnational investment.  Money
is no respector of national boundaries, as we and the SE Asians found
out a few years ago when they were preyed upon.  So while I agree there
is great risk in the Market and economy--I did introduce the "D word"
recently--this sort of analysis isn't the indicator I would use.

Price     Vola-     Momen-    Volume    Oscil-    Summ.
Change    tility    tum                 lator     Index
 -__+      -__+      -__+      -__+      -__+      -__+

 __<_      __>_      _|__      __>_      <___      __<_     01/28
 __<_      __>_      _|__      __>_      _|__      __<_     01/29
 _|__      __>_      _|__      __>_      |___      __<_     01/30
 __>_      __>_      _|__      __>_      _>__      __<_     01/31
 __>_      __>_      _|__      __>_      _>__      __<_     02/03

Timing Signals:  I don't use or recommend timing signals, but they're
fun to watch.  If I did though, well, I might use something like this.
(Be warned!!  It tends to whipsaw around signal points!)

Last Signal: SELL       Date:  01/17/03 S&P:    902
Winner or Loser:  Loser                 By:     -7

See my market tracking charts for '01-'02 and my investment strategy
study at my website(s):
http://www.xprt.net/~pgrogers/Pers.html
http://www.angelfire.com/or/paulrogers/Pers.html
http://www.geocities.com/paulgrogers/Pers.html
.... Blessed are the pessimists, for they made backups. ___ MultiMail/MS-DOS v0.35 --- * Origin: The Bare Bones BBS (1:105/360) .