Was asked to post this from a lurker who would like some feedback from the regulars on his thoughts....
>>>>The Stock Market
I do not believe that the "pullback" is over. I could sight numerous
examples of valuation, but you allready know them well. Instead, I am
focusing on psychology, as it appears to be the main driver of the
market at this time. The two examlpes listed, speak both, to the
attitude, and the intelect, of the participants.
Message 12504333
Message 12504169
All my comments relate to the NASDAQ-100 high fliers unless otherwise
stated, as that is the area I am tradeing. I am currently short.
The exact # of points that the NASDAQ rallied from the Oct.18 low, to
the all time high is 1536.91 intraday.
The exact intra day low on Oct.18 was 2299.95 The exact, intra day,
all time high was 3836.86
The exact 34% fibonacci retracement from the all time high would have
been 522.54 points. The ACTUAL retracement was 522.11 points.(a
difference of .43pts.)
The NAZ-100 broke it's 21 day moveing average for the first time since
the rally began, on this pullback.
It has since, rallied back to the 21 day M/A. (if you want the tightest
M/A that has contained all dips since the rally began, I believe it is
18)
not includeing the most recent breach. I expect the 21 day M/A to
provide strong resistance to any further upside.(to see a good example
of this, put a 21 day M/A
over the SPX or OEX durring the 1998 summer/fall sell off. The market
was consistantly contained by this M/A, with minor deviations.
The market has since rallied back up, past the 34% fibbo retracement of
the sell off. The next fibonicci numbers are 55% and 61.8%
I expect one, or the other, of these two retracement #'s to contain the
current rally in the short term (5 days)
If the market rallies to retrace 55% of it's loss, that would be 3601.91
intraday.
If the market rallies to retrace 61.8% of it's loss, that would be
3637.41 intraday.
If the market rallies to retrace either 89% or 144% which are the next
two fibonicci #'s I am screwed.
If I am correct, and the NAZ-100 bounce is contained by the 55% or
61.8% retracement of it's initial pullback (3601.91 to 3637.41)
intraday, I would then expect it to head lower to retrace either 55% or
61.8% of it's total move up of 1536.91 pts.
A 55% retracement of it's 1536.91 move would take the NDX to 2991.56
A 61.8% retracement of it's 1536.91 move would take the NDX to 2887.05
(I prefer this # because it is very close to the top line of the
tradeing channel from which it originally broke out of. Beyond this
scenario I would have no idea what would happen next. Possabilities
include another short, sharp rally followed by
a further decline to the bottom channel line or a big fat rally. Either
way, If any of this were to happen, it would unfold beginning no later
than tuesday and ending some time at or near expiration. (1/21/00)
My Reasoning For The Above Scenario:
#1-The Fed is draining reserves.
#2-Some money is buying bonds (not much yet, but some)
#3-Does the go-go crowd have the balls to step up, going into the 4th
rate hike?(voltair might, but I doubt the hedge funds do)
#4-The last Bradley model turn was down from my perspective, and the
next turn is on the 17th.
#5-Foreign money is leaveing, removeing an additional source of
funds.(as evidenced by a weakening dollar)
#6-Given the fact that the fed is draining reserves, and some foriegn
money is leaveing, I do not think that there is enough money to drive
both the Dow stocks
and the NDX both higher at the same time. If correct, this would mean
that any further gains in the DOW would come at the expense of the NDX.
#7-A possible wild card is the pension fund money that is widely
reported to be comeing in this week. Although given the strength in the
dow, and the fact that the
A/D line appears to be perking up, coupled with the disjointed
valuations and volatility in NDX it remains to be seen how much goes
where.
#8-Sheppler is right about the ballance of trade #'s getting huge
because this will be the first trailing 12 month report that does not
have the phony $11.00 a barrell oil.
#9-Finally, to buy any of the wrap I just laid out, you would have to
view the NDX and the DOW as two seperate animals, each with it's own set
of rules, which is not that great a leap because that's what everybody
did on the way up. The street may have just found one more "Lifeboat"
that nobody knew about in the DOW.<<<<<<<, |
