MARKET INDEX TECHNICAL ANALYSIS - MITA Message Board

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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA

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To: macavity who wrote (6513)	2/11/2001 10:11:44 AM
From: macavity	Read Replies (2) of 19219

No Fear ! So far market has moved decidedly to the defensive. UTIL/XNG/XOI/OSX are all above their Greenspan-Wednesday closes, DRG is not, but is not far below. This is surprising seeing that the market got its 100bps and Al G is pumping money as if there is no tomorrow. With the CYC/TRAN failing to make new highs (on the second cut) they are now pulling back from their short-term o/bought states (they are both resting on their Greenspan Wednesday levels). It is as if the market does not believe Mr G's rate cuts will work. Maybe they are just forcing him to make a bad trade like the rest of us. This past week UTIL and the energy stocks effectively broke out of their short-term ranges on Wed/Thursday. Everyone had been worried about, or were waiting for, the rotational flows from defensives to cyclicals/tech and the flows have gone the opposite way. With tech looking precarious, it looks as if I should moderate my assumption of this return of tech/aggressives at the expense of the defensives. I find it hard to imagine that the 100 bps won't work, but I think that this will only really work for the non-tech midcap stocks. All the big-caps look in trouble, and tech is now severely o/sold on all short-term oscillators. But the bullishness is just ridiculous. I went long QQQ on Friday just under 57 (and bought my tech shorts back) against short Utility and Drug stocks. I thought Friday would be the reversal day that I was waiting for. Wrong ! Reading the Ameritrade index on Saturday had me choking on my breakfast. These guys and gals have got balls of steel! Ameritrade index was above 80% 3 days in a row - look at the 3 day patterns of NDX and UTIL. No fear anywhere - VIX/PutCall. Anyone see any bearish sentiment? I am right next to my stops on both sides of this trade. Looking at the stock charts I feel that there is enough momentum to blow both sides of this trade out. If so, so be it, I will not venture back until I see UTIL < 385/380 and its 21D stoch heading south. By then I should have gracefully retired from the prediction business. If the defensives still outperform for this week then I reckon its crash helmets on. The market is definitely telling us something if after 100 bps the defensives are still the hottest table in town. I for one will listen and hopefully learn something this time. Still expecting a tech counter-rally which (I believe) would be sold off to get us ready for the 50D cycle low at the end of the month (the second most expected event of the year to date). On the tech positives Semis and Biotechs looked good. I feel that these indices turn first, but after looking at stock charts this falls into the clutching-at-straws category. - macavity.

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