Dow Jones Ind Av

[Lizard]

Hi Arco,

Well, that looks like about a 30% decline in prices still required if I read that right? (Making the radical assumption that earnings aren't going to increase by 40%...)

But then, after that, P/E's might not go up on the back of rising prices, but rather could simply rise due to a decline in earnings? Bullish in terms of P/E but not necessarily in terms of equities. Though I guess at least it would improve the odds of making money on stocks if the prices simply held steady!

(Need to put it next to a similar scale chart of the Dow maybe to see how strong the link has been in the past?)

[dumbass]

lizard, chart is dated 21 september so we would now be in value territory,as p/e will have dropped significantly.

[Lizard]

lizard, chart is dated 21 september so we would now be in value territory,as p/e will have dropped significantly.

Thanks dumbass, good point!

Just had a look to see if there is up to date data and I'm wondering if that chart is correct or whether it was calculated post Mar08 based on index levels and assuming constant earnings? The S&P web-site says the P/E ratio at 30 September 2008 was 22.50.

[Lizard]

Could also be the difference between operating earnings and reported earnings P/E. Dow web-site had average trailing P/E (including negatives) of 15.68 and P/E (excluding negatives) of 12.73 as at 30 September.

Also has lower forecast P/E's indicating earnings growth is still being forecast.

[Hoop]

Interesting chart Arco

Noting the P/E Ratio if this shake out continues and P/E falls below 10, once the market turns up (P/E Ratio wise) It will signal the end (premature) of the secular Bear Market and a commencement of the new secular Bull market.

Previously on the other thread investing strategies and secular bear markets the duration of the secular bear averages about 11 -13 years but it depends on the P/E Ratio not time. The Wall St crash in 1929-1932 those 4 years drop killed the secular bear in 4 years. On the other thread we estimated under "normal" situations that the secular bear would survive until about 2014 it seems it could be now 2008/ 2009 ?? if this bear market lives in into 2009.
It seems even black clouds have silver linings

(near duplicate of this post written on IVASBM thread)

[arco]

.

I notice current PE ratios are available off the DJ website.

http://www.djindexes.com/mdsidx/inde...t=showAvgStats

arco

[arco]

.
The devastation is quite apparent when you see it in a weekly chart.

................. 5 years of growth wiped out in a year.

.

[Packersoldkidney]

I would be very hesitant about assessing stocks on the basis of P/E's - but I don't need to tell Arco that is he is the best TA person I've ever come across.

The issue with P/E's is obviously that they are lagging indicators - current P/E's were established in the previous bull market and booming world economy, both of which are now gone. Stocks on the Dow may well be still hideously overvalued, even taking into account recent falls - but we won't know that in a fundamental sense until company profits evaporate in the face of a global recession.

[dumbass]

What a day , what a day !

looks like end of wave A and into B wave rally

heres a history lesson on previous bear markets to remind everyone this is a tradeable BEAR MARKET rally.

1929: started with a 50% crash drop, retraced 50%, and then eroded for months on end to much lower levels, took 34 months.
1937: started with a 50% drop over 12 months, with a 40% crash in the middle, retraced 62%, and then eroded for months on end to a double bottom, took 61 months.
1973: started quitely, had a 62% retracement after the first drop, then crashed 33% near the end, and the market lost a total of 47%, took 23 months.
2007: started quietly, is near a 50% drop, with a 34% crash near the end, and this has taken 12 months SO FAR

[dumbass]

should find out in the next few days if this rally is the real deal

retracement in progress already bounced off 38.2 fib level

61.8 level 919 with pivot point just below at 912.

if this level is tested would make a good long entry with risk 830, if this level fails then most likely down to new lows.