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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 689.17

+0.2%

Dec 11 4:00 PM EST

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To: Techplayer who wrote (61029)	10/20/2000 12:24:25 AM
From: John Madarasz	Read Replies (3) of 99985

TP... Today was indeed a "classic" follow through day on the COMPX... Although yesterdays decline on steep volume was not the greatest signal to have in the mix. According to O'Neil a follow through day on another index besides the COMP, a few days after today, will confirm the beginning of a new bull rally. This method gives false signals about 20% of the time, and is pretty easy to spot through prompt breakdowns on large volumes. He also goes on to say, most true follow throughs will usually show strong positive action on good volume either the day after the follow through (today) or several days after. Convincing power and strength are what you want to observe. Most importantly though I think he makes the point that markets discount news items and look ahead of the economy up to six months. Make decisions based on objective observations of when and how the general market indices finally change direction from their downward trend. In essence, filter out the noise<gg> The next few days should set the tone, according to O'Neil, and LG<gg> I think both are right in step. Regards, John Madarasz FWIW: Both the SPX and OEX confirmed with follow through days today as well, meeting all criteria, but the INDU rally, while still valid, has yet to follow through on greater volume.

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