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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Chris who started this subject	1/10/2001 3:41:20 AM
From: donald sew	Read Replies (3) of 42787

JAN 12 INDEX UPDATE ------------------------------ Per the DIVERGENCE INDICATOR, which LEE and I developed, the picture it is painting for the NAZ is not that great for the shorter-term. In light of that I may be cutting back on my long positions for the short-term in a few days, and as soon as tomorrow. Our DIVERGENCE INDICATOR is giving 3 possibilities for the NAZ, 2 of which are negative and the one which is positive is only slightly positive(shorter-term, say within 10 days). Here are the possibilities per this indicator: 1) The DOWNTREND which started in SEPT continues down, with the normal oscillations within the downtrending channel or... 2) A MEGAPHONE may be developing, which could produce a strong spike to teh upside soon(within a few days). This possible spike could take the NDX above 2500/approach 2600 region. Unfortunately, MEGAPHONEs(broadening patterns) normally take the direction of the broader trend which is still down. This implies LOWER LOWs and possibly a very quick/strong selloff after the spike up. or... 3) A slight and narrow uptrending channel. If it is this narrow uptrending channel, unfortunately the NAZ/NDX is already 1-2 days from the top of the channel. Such is implying that the NDX may only be able to rally 1-2 days, and only get to the 2400-2500 region; thereafter the selling resumes. This one is the most positive of the 3 since it implies that the selling should not be strong and should produce minor HIGHER LOWs. In other words a slow upward grind. For now Im more inclined to go with DOOR #3, but that also implies that there shouldnt be much more upside in the NAZ/NDX - say maybe 100-200 more points. The main reason why I am sticking with DOOR #3 is that the NAZ market internals are improving. Unfortunately, none of the 3 possibilities are calling for a significant breakout to the upside of the DOWNWARD TREND from SEPT(short-term). That may change down the road. So I will probably start taking profits or initiate hedges on further up-moves. Since the inception of our DIVERGENCE INDICATOR, it has been quite reliable in identifying the current trend.

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