tbul@trsvax.UUCP (08/31/84)
#N:trsvax:52900014:000:2521 trsvax!tbul Aug 31 12:28:00 1984 BULL/BEAR MARKETS ----------------- Ways you can tell that a bull market is in progress. O Odd lot figures favor buyers over sellers (more are buying). O The number of shareholders in the stock market goes up suddenly. O Stock splits are prevalent. O Bonds are yielding much more than stocks. O The P/E ratio of the market in general is high. O There is a rash of new issues. Ways you can tell that a bull market is nearing its end. O Stock market rallies are weak. They seem strong but soon peter out. O Bond prices begin to fall rapidly thereby boosting their effective yield. People thus take a closer look at bonds and shun stocks. O Institutions begin to sell the blue chips. The market favorites are losing their favor. O Stock market volume decreases on the active stocks. O Good news does not lift the market like it used to. Instead, bad news sends it down more than it normally would. O When you see these warnings, buy bonds or other conservative investments. Judging the market O Follow some of the market averages to get a feel for trends. O Is the market headed basically up or down? What is the percentage change over one day? Over several months? O Check the advances/declines ratio. If more stocks are continually advancing than declining, then perhaps a bull market is taking place. O New highs -v- new lows. Should there be many reaching new highs, then perhaps you are in a bull market. O Is the volume of the market going up while the Dow is also rising? Establish the trend in volume. In other words, should the volume be heavy and the Dow be headed down, then be cautious (bear market). O Check the short sales index. The larger the number of short sales the more pessimistic people are. When the short interest is up, remember that they still must cover their shorts by buying stock. Also, you should consider buying stock when people are most pessimistic. O How do stock yields compare with bond yields? Be cautious if bond yields far exceed stock yields (people will begin buying bonds). O Watch the odd lot sales. Be cautious when odd lot buys far out number odd lot sales. Watch for a peak in the odd lot buys as this may indicate the top of a bull market (or just the beginning of one). O Check on the companies that make the active list. Are they big companies with known reputations? Be cautious when little or low quality issues make the most active list. O What is the market P/E? A low market P/E is a very good sign.