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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 676.47

+0.8%

Dec 18 4:00 PM EST

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To: Don Green who wrote (34538)	12/1/1999 8:20:00 PM
From: John Madarasz	Read Replies (2) of 99985

11/24/99 Shepler Capital Management: Intraweek Alert! [Editor's note: Bill's latest report is this intraweek alert. Check back during the upcoming week as updates will be posted within hours of their arrival - Ed.] In last weekends commentary we warned of the flashing "yellow" caution lights being given by many of our technical indicators. With this weeks continued deterioration in market internals and in the interest rate backdrop we are now very close to a "red" sell light. It now appears that barring a strong rally on Wednesday and Friday of this week, that our intermediate-term system will go from a buy signal to a flat signal. This would suggest that it would be prudent to start taking profits on long positions on any further rallies between now and year-end. To repeat the from this weekends commentary, there are several negative factors weighing on the market. For one, "smart money" indicators now show clear signs of professional distribution on the rally off the 10/19 lows. Secondly, the monetary and interest rate backdrop has worsened significantly of late with the long bond yield skyrocketing from 6% to 6.2% in just the last week. And reflecting these factors, market internals have resumed their freefall, with the McClellan Oscillator plummeting into oversold territory at -88 at the close on 11/23, and the A-D line dropping below its 10/19 low. >From a price perspective the SPX is still above key support levels. And, the market does still have positive seasonality on its side (barring any Y2K related distortions). Therefore, we will set our sell stop at 1375 SPX. A drop below 1375 SPX will send us back into cash. Barring a drop below 1375 SPX, we will use any rally above 1425 SPX as an opportunity to scale out of longs between now and year-end. Our next cycle turning point is due 12/7 +/- 3 days and is expected to be a low. (c) 1999. Bill Shepler - You can write to Bill at wshepler@yahoo.com -------------------------------------------------------------------------------- urbansurvival.com

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