Rest up for possible THE most important WEEK of the year!
Wave Signals Commentary
By Mike Drakulich 8-18-01
HUGE MOVE IMMINENT: Do or Die Time
From here, based upon current EXTREME technical readings, I strongly
believe a move of at least 1000-1500 Dow points is imminent. We are about
as "taut" as we ever get, either we break the rubber band and collapse, or
we "snap back" and explode. There really is little else "in between" here
in my opinion. Lets go over the "why" of it. First, I thought it was
important that the Dow did close decently at 10,240, about 60 points off
the low, after at least finally taking out two previous lows near the
10,200 level. The OPEN 10 Trin today closed at the second highest, most
oversold reading in the past FIFTY years, that being todays Open 10 reading
of 1.47. AFTER the crash in 1987, it was 1.58. At THE low major lows in
1974 it was at 1.42 on two days right at the lows. The simple 10-day is at
1.66, bell ringing. The Naz Open 10 is extreme at 1.49. And todays 1.07
CBOE P/C ratio is one of the top closing readings since the major lows in
Fall of 1988, and the 10-day CBOE P/C ratio is at .81, second highest
10-day PC ratio since the Fall of 1998 lows! Highest was seen at the recent
Mar/April lows, around .85. And AMAZINGLY the McClellan Oscillator, a daily
a A/D line oscillator based on the NYSE, closed in positive territory today
at plus 9, simply astounding and unprecedented action! Any time previously
the TRINs have gotten this extreme, the A/D line action has always been
very bad, this has simply NEVER happened before. The TRIN has been the
single best indicator in my experience and study, at extremes, in correctly
locating major bottoms. Not to the day mind you, but at a time one should
be accumulating long positions. We'll soon see if it works this time.
And sentiment, as measured by REAL MONEY "bet"(Trin and P/C ratios),
are giving huge bottoming signals here. The "opinion" polls show much more
mixed sentiment, but I always believe what people actually DO, is much more
important than what they SAY. And there are other huge divergences basis
daily technical oscillators like the McClellan Oscillator. I'll even ignore
the Bullish divergences basis the NYSE McClellan, since many try to suggest
it isn't as valid anymore because of so many closed end and mutual type
funds on the NYSE. Okay, I'll use the S&P and OEX A/D oscillators, no
problem there. Since this decline began off the May highs, the McClellan
oscillator, basis the S&P and OEX indices, has now made three consecutive
higher highs, while price has gone to a series of LOWER LOWS over the past
few months. As of todays close this action is potentially very Bullish,
these type of divergence patterns often indicate waning downside momentum,
and very important lows. The only thing that can, in my opinion derail a
very important bottom here is if early next week "prices", and as or MORE
importantly, the A/D line, crack in a huge way and blow those divergences
out. That would almost have to indicate a 500-1000 point Dow crash, or
more. Could it happen, of course. Does the Trin and sentiment evidence we
ALREADY have support the case that it will, NO in my opinion, and the
"odds" are VERY low in my view of a mini crash from here. Therefore those
odds are very high in support of a very important low. I'm reasonably long
here and have in past days placed by bets, I will exit if too much more
downside is seen early next week, but I will give it "reasonable "room". As
always anything is possible and Monday is HUGE! Rest up for possible THE
most important WEEK of the year! |
