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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 665.67-0.9%4:00 PM EST
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To: Smooth Drive who wrote (29527)10/17/1999 9:17:00 PM
From: Smooth Drive  Read Replies (2) of 99985
 
LG'S OVERALL MARKET COMPOSITE INDEX

The 10 X 30 P&F chart of the OMC gave the predicted double bottom sell signal at the close of Friday's action.

Message 11539969 
                               
                                   *
1760               X   *           X *               
1750               X O X *         X O *
1740               X O X O *       X O   * < Bearish
1730               X O X O   *   + X O       Resistance Line
1720       X       X O X O     *   X O
1710       X O     X O X O   +   * X O
1700       X O     X O X O +       X O < High Pole 
1690       X O X   X O X O X       X O
1680       X O 9 O X O   O X O X   X O   
1670       X O X O X     O X O X O X O  
1660       X O X O       O X O X O X O
1650   X   X O           O X O X A   O 
1640   X O X *           O   O +     O < Double Bottom
1630   X O X   *             +           Sell Signal
1620   X O       *         +
1610   X           *     +
1600   X             * +
1590 O X             + *
1580 O X           +     *
1570 O X         +         *
1560 O X       +             *
1550 O X     +                 *
1540 O X   +  < Revised Bullish Support Line
1530 O X +    
1520 O +    
1510 +      
1500       
1490       
1480

High Pole Formations (regardless of the type) are a terrific leading indicator P&F pattern. The sell signal doesn't always occur in the first down column as it did here -- but it does occur more often than not.

The Revised Bullish Support Line at 1670 offered little support. Look at the current horizontal support at 1640. If it breaks through here and fills the 1630 box the pattern would be a spread triple bottom sell signal. Historically this chart does not go much lower than 12 boxes down without a reversal up. A bounce here would be "normal".

The Bullish Support Line at 1580 is in jeopardy. This line was formed from the low of 910 that occurred on 10/08/98. If it does penetrate this line the Bearish Resistance Line would become the "Official" trendline and the chart would be long term bearish.

This chart is now long term bullish (it's above its Bullish Support Line) and short term bearish (because of the double bottom sell signal at 1640) The first vertical bearish price objective is an incomplete 1520 and the second is 1400.

Take care,

Eric
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