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Our gold stock holdings can be viewed almost exclusively as a defensive bear market tactical measure. But we are troubled by recent price action in the underlying metal. When viewing the price of gold against currencies such as the Swiss Franc, weakness is far more obvious.

In Memory Of Bob Piper...Changes In Perception II...Common Stock Supply Shortage Thesis: Deja Vu......New Zealand Stock Market Update

Not all the groups Wall Street views as defensive are actually defensive. But others have functioned very well as down market protection.

As things heated up in the desert, the bond market swooned. Late in August, Middle East tensions eased somewhat, with the dollar and the bond market staging a rally, trimming the losses for the month. Nevertheless, bond market damage in August was still severe.

Iraq may have been responsible for knocking a fast 100 points off the market in early August, but the stock market had already rolled over. The Leuthold Group’s Major Trend Index deteriorated significantly with the July 27th calculation. This was before Hussein made his move.

A performance run down for our equity market sectors ranked by July 1990 performance. All screen based Quantitative Themes are included, both active and experimental.

Our Major Trend Index sell signal on October 30 may not have been premature, at least not in terms of most stocks. Think of it this way: We did give you plenty of time to get out.

As often noted in these pages, as far as stock prices are concerned, investors’ perceptions are often more important than reality. Political focus on the Ethical Drugs will take its toll on drug industry P/E’s, even if nothing ever comes of it.

As readers know, we have been bears on Tokyo stocks for several years. But we were early in the past. Recent action leads us to believe the bubble may finally have burst, with the remarkable levitation act about over.

Polling the Financial Analysts Seminar...Welcome Aboard Mike Hamilton...Program Trading And Politics

All things considered, the bond market held up well in July. And even though the dollar index slid about 4%, there was little progress on the deficit front and inflation fears rose with oil prices. These bond market negatives were offset by increasing evidence of a recession in the works.

The Major Trend Index shifted back down into negative territory on July 2. It is also worth noting that our Early Warning Index of intermediate tops turned negative on June 25 and remains negative. Thus, as of today, we still remain cautious and defensive in terms of the stock market.

If the Index does shift to the positive side, how can you (in view of your own intrinsic value work) justify aggressively buying stocks? Considering the downside risk, is it really worth it to aggressively buy equities if your Index now turns positive? If your Index does turn positive, what are the chances it might be a whipsaw?

In recent months, two studies have been released on the subject of program trading, particularly index arbitrage. One concludes that index arbitrage activities do no real damage. The other tells it like it really is.

A performance run down for our equity market sectors ranked by 2nd quarter 1990 performance.

Recently some clients have asked about the status of the Very Long Term Momentum Indicator. This stock market tool is the original creation of the late “Sedge” Coppock. While we have made some modifications in interpretation, it is essentially Coppock’s work.

Innocents Abroad--Comments On Recent European Trip...Here Come The Trains--High Speed Train Travel...Natural Gas Into Gasoline?

George Bush turned the bond market around during the last week in June, mentioning that “tax revenue increases” are needed. Long bonds rejoiced by moving up about two points in the last four trading days of June.

While the three month earnings momentum work does not look at all encouraging, there was a glimmer of hope in June. In looking at the individual monthly data, earnings reports released in June were relatively good.

The May market surge was both impressive and unexpected. Most of Wall Street was surprised by the magnitude of the move.