Heinz,
This is from the Stock Attack thread, if you hadn't seen it already, I thought you might want to.
The following cut-and paste is a very thorough write-up on the markets by Don Sew on the Stock Attack
thread. Very worthwhile reading, IMO.
"o: Chris who started this subject
From: donald sew
Saturday, Jun 3, 2000 8:32 AM ET
Respond to Post # 24074 of 24074
JUN 3 INDEX UPDATE - US DOLLAR TANKS, GOLD BREAKS, CAUTION FLAG!!
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SHORT-TERM TECHNICAL READINGS:
DOW - CLASS 1 SELL
SPX - PENDING CLASS 1 SELL
OEX - PENDING CLASS 1 SELL
NAZ - PENDING CLASS 1 SELL
NDX - PENDING CLASS 1 SELL
XAU - UPPER MIDRANGE, POSSIBLE BREAKOUT TO UPSIDE
GOLD - PRICE BREAKOUT to UPSIDE
US DOLLAR - TECHNICAL BREAKDOWN, NEGATED CLASS 1 BUY SIGNAL
VIX - PENDING CLASS 1 BUY(inverse to market)
CBOE PUT:CALL RATIO - .41
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CAUTION FLAG!
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Per my short-term technicals, there is alot which are lining up and calling for a short-term(1-5 DAYS) top. I did
have fears on FRIDAY that the NAZ/NDX may be on the verge of NEGATING my CLASS 1 SELL
SIGNAL(TECHNICAL BREAKOUT to UPSIDE), since the NAZ/NDX closed at their intraday HIGHs. To
further explain, the window for the CLASS 1 SELL SIGNAL was until FRIDAY(JUN 2) highs, but it is very
common that the on the last day of the WINDOW for my CLASS 1 SELL signal, the index normally closes off
of
its intraday highs, forming a DOJI/SPINNING TOP/CANDLESTICK with UPPER SHADOW. If the
NAZ/NDX do not pullback some on MONDAY, or at least close of of its INTRADAY HIGHs, that would
be a
hint that my CLASS 1 SELL signal may be negated and that the STRONG UPSWING could continue.
Saying that - LOOK AT THE US DOLLAR/GOLD/TYX. A major issue may be on the horizon which made
me
raise my CAUTION FLAG. I dont know if we the market/indices will set LOWER LOWs, but if the US
DOLLAR continues to deteriorate, that should have a strong negative effect on the stock market.
The following are INTRADAY CHARTS of the US DOLLAR, GOLD, TYX
quotewatch.com
kitco.com
quote.com
From the above intraday charts, you will notice that the INTEREST RATEs(TYX) dropped more than a
FULL
point at 8:30 am, right after the economic news. HOWEVER, around 8:50-9:00am the rates reversed and
recovered almost all of the early morning drop. For the DAILY CANDLESTIC it was a VERY LONG
LOWER
LEGGED DOJI(tiny upper shadow, and some would just call it s HAMMER. Regardless, with that VERY
LONG
LEG, its a reversal signal, implying that rates should rise at least for the short-term.
Keep in mind that the BIG DROP in INTEREST RATEs before 9:00am FRI, which was caused by the good
economic report, helped fuel the strong rally in the stock market. However, it appears the stock market ignore
that
the INTEREST RATES rose through out the day. Will the stock market be able to ignore it again if rates
continue
to rise next week.
Now we get to the big issue. Look at the intraday chart of the US DOLLAR and you will notice that the
DOLLAR
dropped dramatically in the 8:30-10:00 timeframe. I strong suspect that this was the reason that the
TYX(INTEREST RATES) reversed back to the upside in the same timeframe.
Two days ago I got a CLASS 1 BUY signal on the US DOLLAR, but with yesterdays strong drop, that
CLASS 1
BUY signal was negated, which is my definition of a TECHNICAL BREAKDOWN. Such implies that the US
DOLLAR could drop alot more. For those who are not familiar with my NEGATED CLASS 1 SIGNALs,
heres
a good example. Around APRIL of 1999 when the DOW was around 10,100 I got a CLASS 1 SELL
SIGNAL
which was negated. Thereafter the DOW ran to the 11,000+ range in about a month.
Now the intraday chart on GOLD. In the same timeframe as mentioned above, GOLD JUMPED about $9.00
from 273 to 282. The CRB also had a strong move up.
So with the US DOLLAR moving down and INTEREST RATES/COMMODITIES moving up, I strongly
suspect
that such will eventually become a big negative for the stock market if it continues. Now the question is will the
DOLLAR/RATES/COMMODITIES continue their trend. Im not an economist so I will leave it to others to
give
an explaination based on fundamentals, but lets put it this way - currently there are no technical indication of any
significant reversals in the near-term, so Im more inclined to say that the currents trends would continue for at
least
the near-term.
If the current trends in the DOLLAR/RATEs/COMMODITIES continue on MONDAY and follow-thru for
the
rest of next week, things could get quite nasty and I would not ignore the possibilties of retest of the recent lows
or
even LOWER LOWs. Frankly, this could be a set-up of an environment for a PANIC CYCLE PHASE for
the
market which could cause the stock market to, at least, retest the previous lows. I'm not saying that it will
happen
since I dont believe in making the big/huge call, but I cannot ignore the possibility of such occuring. If I had to
guess, I would guess that there is much less than a 50:50 probability in calling a PANiC PHASE correctly so I
wont put a whole lot into it, but strongly suggest to watch the DOLLAR for further deterioration. Regardless of
a
PANIC PHASE, if the DOLLAR/RATEs/COMMODITIES continue their trend for most of next week, that
would be a significant negative for the stock market and we should see a short-term top as early as
MONDAY.
Right near the CLOSE on FRIDAY, I attempted to get XLK JUN PUTs but my limit offer was not executed.
The
XLK is one of the SPYDERs which follow the NAZ/NDX closely. If you look at the XLK CHART there is a
PERFECT SHOOTING STAR.
Again, my CAUTION FLAG is flying. Its only a caution not a certainty, but we need to watch the US
DOLLAR
carefully since something BIG and BAD could be on the horizon."
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