Chip, you've got some really nice material here.
I think we've could see a continuation of of the
stock market's rally we've been seeing since the 9-21-01
low. A near term acceleration could indeed occur. If
the SPX and the DJIA climb through their 200 DMA's, it's
believable that it could occur, as asset allocation
models kick up their equity allocation.
Here a 3 charts of the SPX and the NASD that are looking
at Welles Wilder's research with the ADX and the directional
Movement + and - indicators. In his landmark book, 'New
Concepts in Technical Trading Systems"
He says in section IV of the book that he has probably
spent more time studying directional movement than any other
concept. He was very happy when he came up with a specific
mathematical formula.
johnpsmarketlab.netfirms.com
(these are big charts and to see them all on one screen
resize your browser to 1280 x 1024 pixels or 1152 x 864
pixels. go to an empty part of your desktop and right click,
select Properties and then Settings)
on the first 2 year chart of the SPX the red ADX line
reached a bottoming area on the study window above the chart
that had previously given us tops in price in the SPX, but
this time the market has continued to rally for a number of
weeks. This suggests that we could have a bullish momentum
quality, that has been absent since the March 2000 top.
On the second PSX chart which is a 4 year chart, we can
see that the blue study line which is the directional -
(minus directional movement-- the ease of movement is down
in price) reached the highest level since the near bear
market of July 20th to oct 5th of 1998.
the study at least suggests that the 9-21-01 low is
related to or more like the 1998 low.
the Blue Directional - line shows how powerful the selling
pressure is and just as in the momentum study of cycles,
Panic Lows are more pronounced and focused, than market
tops.
Panic Lows are more focused than greedy Topping action which
can a diffusive multiple top quality.
the NASD chart shows that this Bearish Blue Directional
Minus oscillator reaches the highest level since the 4-14-00
low in the NASD. That Low was imo the most panicky of the
2000 bottoms we experienced.
So the April 2000 low might bookend with the 9-21-01 low,
and represent either a complete bear market or the first
part of a longer secular bear market, in which case it
would be represented in Elliott Terms as the A wave decline,
that lasted 17 months.
Thus we would be in a B wave rally that could last
for a .618 multiple of 11 months or a 50% time multiple of
8 to 9 months.
I'm doing some further examination of the longer term
charts, momentum studies etc.
John |
