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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Teresa Lo who wrote (17304)	6/21/1999 9:03:00 AM
From: Teresa Lo	Read Replies (1) of 99985

Market SnapShot for Monday June 21, 1999 The September S&P futures closed above 1352 on Friday, the second time in two days over a key resistance level on the intraday and daily chart. The market is at an important turning point right here. Friday's action formed a Japanese candlestick called a "spinning top", marking a day of indecision at key resistance. The market is about to decide to either go for a test of the all time highs or find resistance right here and test the recent lows. Resistance overhead is at 1368.50 and 1392-1394. Support is at 1300.50 and 1290.50. Friday's trading range for the Dow Industrial index was the smallest in almost a week and it happened right on the immediate downtrend line on the daily chart. It must show strength right here in order to pick up momentum to the upside. Looking at the daily charts of the indices, many will be tempted to use words like "breakout" to describe the situation. Given that we are now over resistance at both the 20-day EMA and the 50-day SMA, and the fact that the recent sell off held the 20-week EMA, it is indeed correct to make this a possible scenario. However, we caution that the market in general is still locked in a large trading range between the all time high and the recent low. Given the low ADX levels on the daily charts, any rally could also set up a test of top scenario at the old high, should it go that far. The CBOE Internet index is a close proxy for the blue chip Internet stocks. After trading back into the May 26 low, these stocks have bounced to the 20-day EMA where the downtrend line is also located. Friday was a very narrow range day and we will look to the next day or two to give us an idea how much resistance there is at the 20-day exponential moving average. The INX is at a critical juncture here. Any weakness here will bring out sellers, given the strength of the recent sell off. The charts have been posted to intelligentspeculator.com

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