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Strategies & Market Trends : The 56 Point TA; Charts With an Attitude
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To: Doug R who wrote (30317)12/5/1999 5:29:00 PM
From: Doug R  Read Replies (1) of 79227
 
13 dRSI system update for the S&P 500:

Lines start from the indicator low on 8/10/99.
Line 1 goes across 9/16 low.
Line 2 goes across 11/23 low.
Line 3 goes across 9/21 low.
Line 4 goes across 10/4 low.
Line 5 goes across 9/28 low.

Line 4 has been used as support on 10/26 and 12/1. The indicator bounced off line 4 on 12/2 moving to line 3. On Friday the indicator accelerated through line 3 and has also broken above line 2. Expected activity would be:
1.) a move to line 1 which would likely be seen as resistance (an outright break over line 1 would be extremely bullish)
2.) a dip back to line 2 to look for support.
2a.) if line 2 is used as support, another break over line 1 would ensue.
2b.) if line 2 does not hold, a drop to line 3 would ensue.

Only a break below line 4 would signal the technical start of a correction. The market could still go higher for a while after a break below line 4 with the indicator moving back to line 2 but the series of moves on the indicator would shift to that of hitting lower and lower lines as resistance from below while stepping down through lower lines after each resistance hit.
So, a move under line 4, followed by a move up to or above line 2, a drop under line 3, followed by resistance back at line 2 (or possibly 3) then a drop to or under line 4 again would be a warning that the indicator is ready to go oversold again. Until then...the bias on the S&P is very much UP.

Doug R
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