Volatility continues at an elevated level. This is always the case during
major changes in market direction. Even though it is expected, the volatility
this time has surpassed even our most exaggerated expectations. It is truly
Volatility can, and is presently confusing both the bulls and the bears.
Some who are still bullish, view negative days as a buying opportunity. Those
that are bearish, view positive days as an opportunity to sell before the
market drops any further.
The changes to underlying factors are seen well in advance and taken into
account by the Model. And this is the only reliable manner in which we may
actually predict market direction. The underlying economic factors in
the market always overtake the “noise of news events of the day in
the end”. In fact the news is practically always the opposite of the
facts when it comes to the market. To react to “news events” is to court
disaster. Using only technical work is often wrong at major market turning
"In his book Love Against Hate, Dr. Carl Menninger states 'The most
difficult task for human beings is to raise children and to trade the markets.'
Dr Menninger wrote these words in 1934 - little did he know how true this
statement was. ...Your 'critical mass' message is one of the best things that
can happen to a trader ...In short (after a long letter) I would like to thank
you for a very valuable service ...
·G Feuer Queens, NY Feb, 2000
In Jim’s April 2000 update to our clients he made two observations
on the subject of inflation. His ongoing calculations had been showing that inflation
was more a problem than most believed and was a real danger to the markets.
Two of the key gauges that measure inflation are the Consumer Price Index (CPI)
and Producer Price Index (PPI). When these numbers were presented by government
agencies they were seasonally adjusted and reported a month-to month reading
that made the headlines in the media. However Jims’ calculations were
correctly done on a year-over-year basis, which is less prone to error and
gives a truer picture of the inflationary climate. Real inflation when
calculated and presented properly has been running at a rate of close to 4%
annually. In October 2000, the government released a statement that the CPI
figures had been “botched” and the CPI number was actually much
higher that they had previously been reporting, which of course is what Jim
had been saying for months.