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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 672.07-1.7%4:00 PM EST
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To: Sultan who wrote (40580)2/18/2000 3:14:00 AM
From: Smooth Drive  Read Replies (1) of 99985
 
GE as a market bellweather, using an end of day 3 box reversal P&F chart with 2.38% boxes.

165.51857
161.67080
157.91248                                      X   * < Bearish R/L
154.24153                                      X O X *
150.65592                                      X O X O *
147.15367                                      X 1 X O
143.73283                                      X O   O          
140.39151                                  X   C *   O 
137.12786                                  B O X   * O
133.94009                                  X O X     O
130.82642                                  X O       2 *
127.78514                                  X *
124.81455                              A   X   *
121.91302                              9 O X     *
119.07894                          X   X O X       *
116.31074              4           X O X O           *
113.60690              X O X       7 O X             +
110.96591              X O X O X   X O X           +
108.38632              X O X O X O 6 8 X         +
105.86669              3 O X O X O X O X       +
103.40564      X   X   X O X 5   O X O       +
101.00179      X O X O X O       O         +
98.65383       X O X O X                 +
96.36045       X O X 2                 +
94.12039   X   X 1                   + 
91.93240   X O X                   + 
89.79527   X O X                 +
87.70782   B O                 +
85.66890   X                 +
83.67738   X               + 
81.73216 O X             +
79.83215 O X           + < Bullish Support Line
77.97631 O X         +
76.16362 A X       +
74.39307 O X     +
72.66367 O X   +
70.97448 O X +
69.32455 O +
67.71298 +
66.13888 9       9                             0          
         8       9                             0

Given GE's history, I consider a trend change negative anytime I get three O's below the previous column of O's, and the trend positive with three X's above a previous column of X's. The trend line matters but it's secondary to these signals.

                  DATE:       Box Size:
Went Negative -   10/16/87     13.36   
Went Positive -   02/15/89     12.16
Went Negative -   09/20/90     13.67
Went Positive -   01/30/91     15.38
Went Negative -   09/01/98     79.83
Went Positive -   11/04/98     89.79
Went Negative -   01/28/00    133.94

The trend is now negative (on a sell signal) and even though the action is above the active Bullish Support Line, the unofficial Bearish Resistance Line is in control of this chart. The first bearish price objective off the top is 130 and the second is 119. The first breakout price objective is an incomplete (it's incomplete until the current column of O's reverses up) is 113.

Take care,

Eric
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