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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: dennis michael patterson who wrote (21346)	6/7/1999 1:52:00 PM
From: Robert Graham	Read Replies (2) of 42787

I thought playing ATHM on the bungee jump off of the 200 day EMA was not a good decision. I will admit that in a different market it was a good setup for a bounce. First, ATHM showed no sign of reversing by the end of Friday where there were buyers stepping up. Second, the chart is poor with much technical damage that is simply getting worse, not better, as evidenced by a very recent breakdown. Third, and most importantly, the bounce relied on sentiment that has been absent in the market for a period of time now. I am surprised that there was not a better attempt at a bounce. EBAY would of been a better play as a breakout candidate as would of other tech stocks. I also saw EBAY validating the NASDAQ move up Friday that had me take the market rally more seriously. The market by the end of Friday looked like it was going to continue up. Friday was the START of a short term up cycle that can last at least into this week. This is the time frame of the short term player. Therefore it would be more profitable to be on the long side instead of chasing short candidates. It pays to be in touch with sentiment which is difficult thing to do over time. This is particularly difficult when it is easy to confuse ones own sentiment with the market sentiment. Sentiment is an essential element that provides the context for the picture painted by the short term chart particularly at market junctures. Sentiment and money flow IMO are the two factors that drive the market on a short term basis. The bullish market sentiment is intact but waiting for the right time to commit money. If the market was going to sell off, it would of done so already. Instead it rallied back above important support closing near its high and predictably continued up today. The market now is reacting to mixed news in a bullish fashion after any initial knee-jerk reaction. This is the tip off. The market wants to rally with exuberant sentiment still being reigned in at this point. This makes for a more solid move up from an oversold status that has been in place for some time now. But once the market starts to soften up again, watch out. Fear is still in place and waiting to show itself yet another time. And I do believe the market will sell off at least one more time before a solid bottom can be put in place. It is interesting to note that this market rally was facilitated through a program trade which successfully moved the S&P 500 beyond resistance. This was followed by short covering which is now being followed by short term speculation on the long side. A tentative start to a rally. But price action on stocks indicated that there was interest in a rally. The DJIA was the first to start a short term trend up. When the shorts are the FIRST to act by covering their positions, this is a tip off that helps reveal the sentiment of a "waiting" market. Now lets see what these stocks do at significant resistance which I see some are at right now. Too bad business took me away from by EBAY pick! Anyone notice large block accumulation in the market of the techs prior to this move up by the market? Where are the large blocks going to? Comments welcome. Bob Graham

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