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Taking a Sentimental Journey
By Helene Meisler
Special to TheStreet.com
4/25/00 8:25 AM ET
April 25, 2000
As I watch one market player after another give interviews about the decline of the Nasdaq Composite Index on Monday, I'm amazed how one-sided the view is: We have seen the low and Monday was a successful test. In my opinion, Monday was not a true, successful test of the April 17 low. A true, successful test would've taken the Nasdaq down to a new intraday (or closing) low while the underlying statistics held. Frankly, sentiment is in the wrong place for this to be a great low.
There were some signs of holding into yesterday's low. But this is short-term stuff; sentiment is the major ingredient missing from this "real bottom." Almost every major bottom has been accompanied by a great deal of bearishness. For that reason, I believe this is all part of the process of trying to find a bottom. Because we need a series of rallies and declines to make up bases, it appears we're about to have an upward bias for the remainder of the week.
The first sign of a short-term low comes from the oscillator. It is oversold, and yesterday's decline, even at its worst, never came close to the oversold reading we saw on April 17. So we've got a higher low, or a less oversold reading, which creates a positive divergence. Sure, it would've been better if we had broken those lows of 10 days ago, but we didn't. But now we must look forward, and since the oscillator is a 10-day moving average, we can see the numbers we are "dropping." Here's what that string looks like through the end of the week:
-1802
-1776
-2332
-3434
For this reason, even declines on the Nasdaq should show very little downside momentum for the remainder of the week, and any rallies should show upside momentum
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