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Pastimes : Ask Mohan about the Market

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To: John Hunt who wrote (16794)	10/19/1998 6:14:00 AM
From: John Hunt	of 18056

Dow surprises but nothing has changed gold-eagle.com << It will be helpful, before proceeding further, to understand that the very phenomenon of the inverted triangle — a rare formation — evolves from a market milieu of widespread uncertainty with wide differences of opinion among market participants and without firm leadership in either direction. Such has been the case on Wall Street for the past several weeks. Thus, it is not at all surprising that the inverted triangle has arisen on the Dow's chart. The measuring implications of the inverted triangle involve equating the distance between the upper and lower boundary lines (support and resistance) that form the triangle. The distance between the "mouth," or widest end of the triangle, generally provide a good indication of the minimum distance in which the market must either fall or rise upon breaking out from the triangle. Thus, if our triangle in question holds up, a downside breakout from its current level at approximately 8400-8500 would yield a drop of nearly 1000 points below the horizontal support line (at DJ 7500). One-thousand subtracted from 7500 yields a minimum downside target of DJ 6500. At the very least, we believe this is the level we can expect to see on the Dow before the month of October is finished. Note also the much smaller potentially bearish ascending wedge pattern at the outermost tip of the Dow's chart. This could be a portent for a sharp decline sooner than we might otherwise expect (i.e., this week, perhaps). We note further the more clearly delineated inverted triangle forming in the Dow Jones future chart (basis December). Two side-by-side white candlestick patterns on the candlestick chart of the December Dow futures on Thursday and Friday have perfectly matching lows and highs which probably portends a continuation of the latest upward bias. Based on this pattern alone, we can probably expect at least one more burst to higher levels in the next few days before a turnaround. >> One man's TA.

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