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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: J.T. who started this subject	1/6/2001 10:50:34 AM
From: LaVerne E. Olney	Read Replies (6) of 19219

Here are a few indicators (VIX and breadth) which are at historical extremes, probably indicating a BOTTOM. 1. Even though the VIX has not approached the extremes of the Fall, 1998, values, the DURATION of the current extremes (10-day moving average VIX > 27) is 58 days and counting. The total duration above this extreme level was 64 days in 1998. jove.prohosting.com 2. The Arms' Index (TRIN) is a ratio of advancing issues-advancing volume to declining issues-declining volume. In the past 9 years (for which I have data), there have been 5 previous occasions when the NASDAQ TRIN has been greater than 3.2 (range 3.21-3.57). The first four of these (10/9/1995, 10/27/1997, 4/14/2000, 5/19/2000) were either coincident with, or within 1 day of a NASDAQ cycle low. The latest previous occurrence was 11/8/2000, which may have been related to the Election stalemate. Friday (1/5/2001) had a NASDAQ TRIN value of 3.42. A chart of the 10-day TRIN (10-day moving average) shows recent extremes higher and of longer duration than those seen in 1998. jove.prohosting.com 3. Both NASDAQ McClellan Summation and HI-LO Summation* Indices are coming off significant bottoms. jove.prohosting.com jove.prohosting.com Here is a HILO summation chart of the 1993-1995 period (FOMC policy changed from tightening to loosening in Spring, 1995). jove.prohosting.com * This High-Low Summation Index is calculated in the same manner as the McClellan Summation Index, using the New Highs/New Lows instead of the advance/decline numbers. The daily market new-lows are subtracted from the new-highs. The 40-day exponential and 20-day exponential moving averages are calculated. The 40-day EMA is then subtracted from the 20 day EMA to get an oscillator value. The daily oscillator value is then added to the prior day's Hi-Lo Index (summation index) to get today's Hi-Lo Index. leo

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