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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 679.68+0.7%Nov 26 4:00 PM EST
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To: bobby beara who wrote (20945)7/24/1999 10:51:00 AM
From: j.o.  Read Replies (1) of 99985
 
Bobby, I have been looking at some Nutz, and wonder what you think of the following...

Let's take the dot.x chart. I am looking at the huge H&S with shoulder 1 Jan 1st-mid Feb, the huge head, and then the last shoulder starting from June 1st until now, and excluding the tiny break below the real consolidation area. So using the early June consolidation area as the neckline...we are now approaching the neckline for a real make-or-break situation here.

If indeed the neckline goes, it looks horrible. And the fact that we're already well below the 50-d EMA doesn't help. Plus our last rally was on horrible, horrible volume - typical for the last group getting in. And as you say, the buyers were indeed the true market novices.

So where does that leave us? We're also perched above the trendline in the Dow which extends from the October lows up until now. If both go at the same time it doesn't look good. And the price action of the last couple of days does not give me the impression that a lot of buyers are waiting in the wings. At the same time, it seems silly to sell into the Dow when the obvious and well-tested uptrend is right below us.

So I'm not selling now. I'll hang out for a bit and try to get a feeling for the price action around these levels. Because if we hold, we're likely to get a very powerful move to the upside. 3-month OTM strangles beginning to make some sense...

j.o.
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