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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 660.19

-0.8%

Nov 18 4:00 PM EST

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To: dennis michael patterson who wrote (39445)	2/8/2000 11:58:00 PM
From: StockOperator	Read Replies (1) of 99985

You just have to love the spin on Wall Street. Where else could you possibly see such a huge shift in analyst sentiment in just a short two weeks! When I made my last post about two weeks ago there was an almost unanimous opinion on the street that the rise in rates and inflation was going to stop this bull dead in its tracks. It seemed that every analyst interviewed was reading from the same cue card. Once again just as history has proven over and over again that when an opinion is accepted and agreed upon by such a cross section of the street, the contrarion approach is usually the most profitable side to trade from. A fact that even the most profitable trading firms discovered the hard way as money rushed into the bond market as well as an historic one week move for the NAZ. You have to be in awe of the incredible volatility in prices. The moves that we are seeing in stocks and indices can either make you rich in a hurry or take you out of the game early. All the more reason we need to develop a strategy with which to trade. My own approach has always been to look at the markets from as many angles as possible. Indices are made up of many different companies, it only makes sense that when a cross section of these companies have bearish or bullish chart patterns that these patterns should ultimately play out accordingly in the indices as well. Also realizing that prices should be watched on a multi-time frame for clues in the overall trend. That is why in my last post I mentioned that many of the high techs that I follow have bullish patterns for this month. Enough rambling here are a couple of observations as we move into mid month: The Naz has continued to defy the rest of the market. Watch how this index handles the 4510 (roughly) area. We are very close. The DOW which is beginning to recover from its latest weakness needs to continue to hold and move higher this week for what should be a more prominent move next week. This index overall needs to break higher in the short term. The RUT which is currently at 537 is going to run into some serious resistance around 550. Watch to see how prices handle this area. Keep in mind that 550 on the RUT and 4510 on the Naz could be hit this week. It will be interesting to watch how this plays out in relation to the DOW which is in need of a rally here. According to my read the Nikei is poking its head above a very long term resistance line. Any breakout here, imo, should be powerful as prices break through this area. Any bullish move that lacks conviction should be viewed as suspect. Despite the dramatic shift in the bond market the TYX remains in an uptrend. Any downward break of the 6.0 area I believe (especially on a longer term closing basis) would imo point to a serious shift in the overall trend. This I believe will become more apparent as we head into the next quarter. Despite the recent negative news for Dell prices have managed to hold. This stock is trading right on long term support and needs to hold here. IBM needs to start to breakout here. The pattern overall is one that should dictate a break in prices imminent. YHOO is poised to move higher and GE is in a position where prices need to rally hard. INTC is attempting to break out of a four week consolidation. The e-brokers as a group could be interesting. Stocks like NDB have already started to move. Here are a few interesting and most likely volatile (dangerous) trading opportunities: PNVN ($6.43) went public a few months ago and has been beaten down pretty badly. I am watching to see if prices can stabilize this week, if they do next week could be interesting. VIAD ($36) could make an explosive move from these levels. ASDS ($10.8) which is still in an overall downtrend looks ready to make a bullish move within that trend. VUSA at $6 also appears ready to make a bounce. These plays could be very volatile and imo represent short term plays. Let me also say that I believe they are for nimble traders only. These patterns can break either way with prices continuing their downward action. However, I believe much can be learned by watching how prices react in these "do or die" situations, especially for someone new to TA. We all have our own way of navigating the markets. My own experience tells me that there is no such thing as a "random walk down Wall Street." Good trading. SO

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