Saturday, May 9, 2009

Interesting Quote

Robert Rhea, the great Dow theorist of the 1930’s wrote: “It is almost certain that a panic rebound will recover 40 percent or more of the preceding decline.” Mr. Rhea goes on to say “Whenever a panic decline occurs, the market thereafter seems to need a resting period during which it appraises the damage to its structure. Prices frequently back and fill for several months in such areas. The action somewhat resembles that of a pendulum which, oscillating slowly as it seeks equilibrium, gradually comes to rest. The direction taken after equilibrium is attained is generally significant.”