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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Les H who wrote (20236)	7/16/1999 3:26:00 AM
From: Lee Lichterman III	Read Replies (3) of 99985

I have a huge number of over bought indicators firing off on my charts and tonight's scans kicked out the highest number of over bought stocks since last years pre-sell off market. I think the multitude of over bought stock is forcing speculation in some of the weaker issues that the funds wouldn't have touched with 10 foot poles a few weeks ago. Besides your list, dog stocks like HMTT are now trying to rally substantially along with many others that were either laying flat or steadily dropping. This is causing alarm bells to go off in my head. (Maybe a tin foil hat would stop that and the little voices. <g>) I would be screaming sell everything here normally but my TRIN chart is showing the high probability that another upswing should come early next week and there is more room on many of my indicators for one more brief rally despite the fact that the price charts are already over extended and are splattered with class 3 and 2 over bought signals. I guess I will wait until they are class ones ro hard Sells. To be honest I am totally confused now by the mixed indications. My charts are telling me to sell pre-established long option plays on the automated systems but the indicators that are independent of those are showing this may just be setting up the final blowoff rally so it isn't a strong short play period yet. I have read that some think the strongest sectors so far will continue to be strong which is highly possible given that the BTK has already violated the resistance line I had and kept going. I however tend to think that there may be a rotation to the lagging sectors instead due to the room to allow them a climb and allow profit taking in the areas that have already had their rally. Note the GAX reversed back up right on cue according to my fork. There are a few areas that still concern me fundamentally. The Bank indexes continue to be weak and the Transportation indexes are flirting with supports also. The utility indexes are barely rising fast enough to stay above supports as the Bonds wander aimlessly. The Bollinger bands onthe indexes are getting tighter and tighter and as the pressure builds, these indexes are going to either make or break soon. We could stay somewhat sideways but the longer we do this, the crazier the move will be and it already could prove to be huge. On some of my un-published charts, there is a convergence of trendlines, forks etc still pointing to mid August as an important time. I am pretty sure the direction will be down unless we sell off strong next week which I seriously doubt. I am going flat tomorrow including my kids holdings as I want to figure out what is going on. I really don't fear a pull back here but I also think that finding the rising stocks may be a bit tricky. As I said to Mr. Wei last weekend, Sometimes waiting is the wisest choice as I doubt too many made much on positions entered first thing Monday morning. The rotation has been quick and varied as this week went by. There is going to be some big DOW stocks reporting next week that may move some money that way now that the big Tech stocks have had their turn. Still it is hard to tell whatwill gain and what will lose. PG which has been a losing bet which was deserved (remember when they first ran it up after a lousy earnings report last quarter baiting J6P to take their shares off their hands?) has suddenly reversed and started heading up again while T has been in a fairly steady down trend since announcing that they were buying the Cable company. This is not a market for the slow. I still haven't had as much time as I need to make good choices so I am going to get flat and then hopefully get some time this weekend to see how things look and then see what Monday does as the market gets back to post options trading. Good Luck, Lee

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