WELL THEY SURE KNOCKED THE CRAP OUT OF THE MARKET MID WEEK DURING OCT 6TH..AND THEN WHAT A POWERFUL RALLY?...OK SO LET'S SEE WHERE WE GO FROM HERE...
JERRY OLSON'S
"POINT" OF VIEW NEWSLETTER
DATED OCT 6TH 2002
"ANNIHILATION PHASE IS HERE"
Hi everyone, well they just keep on bashing this market week by week...I truly hope you're all doing well, sitting quietly on the sidelines holding your cash reserves here and doing nothing but prospecting all those stocks we watch for entering if/when we turn up...There's a taste of fall in the air this beautiful Sunday here in the burbs of Philly...It usually means a change is coming and I'm not just talking about the weather<g>...
Like I wrote in the Sept 22nd letter about the coming of Armageddon, well here it is in all it's glory, and now? This the final phase of the bottoming process..I call it the Annihilation Phase when everything goes down no matter what stock/sector/ or index your watching..They all just fall together...It's an important phase to be sure, as the more over sold we get the BIGGER the bounce. I have lived this exact scenario before many times..They just give up..Now the final nail will be a panic big time capitulation selloff and that WILL BE "THE" BOTTOM.
Last week was a stone cold distribution week. Every single rally was met with waves of sellers. Not a buyer in the house. We continue to see major trouble in all the index charts as well as the P&F indicators too...But we are getting to very oversold levels on P&F...Stocks above their 10 week moving averages broke down last week..a negative for sure short term...it's at 24% and could go as low as 8 or 10%...They all just keep falling here..there was massive selling within the internals of the markets on Friday in particular..very very negative right now..But I would expect to SEE this event as we cascade lower and lower...This folks is the bottoming process at work..understand it, and have no fear about what is happening here...
I am hoping against all hope that throughout all these goings on you were safe..I have pounded the table for months on end not to invest, not to buy anything. To simply daytrade or stand aside... I am sure that your all sensible people/traders..Money is paramount when it comes to investing and trading..Heck it's our lives at stake here everyone...I hope too that you called and sat down with friends and family to discuss this whole situation. They need to understand what's going on and what is going to happen next...It's your obligation to your folks to get them squared away for the next best move UP...It's coming for sure..I don't know for how long, but we'll see a rally...There's a big seasonal influence here starting in Nov..even late Oct...Get ready..check out all the things I've been blabbing about for months ad nausea..
ETF's & IShares...Buying a stock with a dividend and selling Leap Calls, Using indexs to trade the markets SPY--DIA--OEX--SPX--BBH--SMH-- ETC...Getting rid of all your dogs with fleas..heck this should have been done 6-8 months ago...I've been using a 2X4 on this one thing alone for months...I hope you've listened and have set yourself up for this coming rally...If not, it's too late..Those stocks under $5.00 are dead..and under $10 probably too...Mutual Funds managers are prohibited to buy them...Anyway I'm hoping you've done some DD here and have corrected any problems within your own finances...
Let's talk a bit about and off topic..IRAQ...I'll tell you this much the Pres in on TV Monday evening. He's using this IRAQ thing IMO to keep the public from squawking about this terrible economic situation here at home. HIS administration got us into this downturn. We had a 3 trillion surplus..now it's hundreds of billions in debt? Geez that was fast huh??? I don't like this entire WAR situation one damn bit...IRAQ is a lame a country as you can get...They couldn't bomb us here if we GAVE them ballistic missiles...They have no army, they have nothing...Do you truly think what with all the Arab Nations surrounding IRAQ that they would permit him to use weapons of mass destruction? yeah sure...Like I said this a complete divergence during an election year for the Bush Admin to rally the country toward a WAR...All I can say is NUTS!!!! The markets hate uncertainty...and if you think this is going to help..think again...
OK LET'S DO SOMETHING WE ALL LOVE TO DO, CHECK OUR CHARTS...
DJIA---IT HELD A DB(DOUBLE BOTTOM) AT 7500. A BREAK OF 7400 TAKES IT RIGHT TO MY 1ST TARGET OF 7100..WE PROBABLY BOUNCE FROM THERE FOR A BIT, AND THEN "MAYBE" TEST 6500 IF THIS GETS OUT OF HAND..7800 A 3BXRVUP( 3 BOX REVERSAL BACK UP). THE 20 EMA(EXPONENTIAL MOVING AVERAGE) IS AT AROUND 8000 ON THE DCC(DAILY CANDLE CHART). WHATS LOW HERE IS THE BPDJIA..IT'S AT 10%...THE BULLISH PERCENT(BP)
NAZ/COMPX---BREAKS A SERIOUS BOTTOM AT 1250, THE DOWNSIDE TARGET REMAINS AT 1050. 1170 IS THE 3BXRVUP AND WE COULD BOUNCE TO THE 20 EMA DAILY CANDLE CHART(DCC) TO 1220...WE ARE WELL BELOW THE JULY LOWS AND LOOK VERY WEAK...ALL BOUNCES FOR NOW ARE SHORTS..
BKX---CRASHED AND BURNED LAST WEEK AS THE BANKS AND FINANCIALS GOT KILLED...OH AND SO DID THE BUILDERS AND SCHOOLS & COLLEGES..EVERYTHING FELL OUTTA BED<G>. IT'S VERY OVERSOLD(O/S) HERE BUT THE PERFECT BREAK POINT WAS AT 665 AS ADVERTISED. I THINK 600 IS A GIVEN... ANY RALLY UP IS A SHORT...WATCH 670/80 AREA..
BTK---ANY BREAK OF 300 TAKES IT 1ST TO 280 AND THEN MAYBE 240...EVERY CHART I SEE IS A HEAD AND SHOULDERS CHECK OUT THE DAILY CANDLE CHART ON THE BTK..YOU TELL ME...BTW(BY THE WAY) THE 240 AREA IS 100% OVERSOLD...RIGHT NOW 325 IS THE 3BXRVUP..335 IS HEAVY R(RESISTANCE). THE BPBIOM IS AT 24.69 AND IS ONLY ABOUT 1.50% AWAY FROM A 3BXRVUP..THAT WOULD BE A BIG POSITIVE..I HAVE SET ALERTS...
BBH---IN A VERY LARGE TRIANGLE ON THE P&F CHART...IT'S TRYING TO "HOLD" THE UPTRENDLINE..THE BSL..IF THE BTK CRACKS THEN OF COURSE SO WILL THIS INDEX. WE COULD SEE 66/67 AREA...80/81 IS STILL O/H R AND A SS THERE..SS MEANS SHORT SALE...
NDX---BROKE DOWN AGAIN, AND AGAIN, AND AGAIN..GEE WHIZ...THE CHART IS ONE UGLY THING TO SEE...WE CAN STILL SHORT "ALL" RALLIES ON THIS INDEX USING THE QQQ'S...840 THE 3BXRVUP..870 THE 20 EMA DCC...
OEX---OHH YEAH BABY<g> TRADED THIS REAL TIME ALL WEEK FOR NICE GAINS AND "ONLY" ON THE PUT SIDE...I TOLD YOU 2-3 WEEKS AGO TO USE THE OEX 440 PUTS..YOU WOULD HAVE MADE OUT LIKE A BANDIT..NOW USE THE 400 SERIES FOR OCT..AND DAYTRADE THEM...BE CAREFUL AS THE PREMIUM WILL COME OUT QUICKLY..AND ALWAYS USE LIMIT ORDERS HERE...I USE MARKET ORDERS FOR STOCKS BUT NEVER FOR THIS INDEX..YOU'LL GET MURDERED..THE CURRENT PATTERN SAYS 385 AND THEN MAYBE 365 THE BOTTOM OF THE 10 WEEK..430 IS THE 20 EMA DCC.
SOX---BREAKS YET ANOTHER BOTTOM AT 230..I SAID WE'D REACH 220, WELL I WAS 3 POINTS OFF?..NOT TOO SHABBY HUH<G>...240 THE 3BXRVUP..255/60 O/H HEAVY R THERE..BPSEMI IS AT 8% NOW THAT'S OVERSOLD..BUT WE COULD MOVE LOWER STILL...14% IS THE 3 BXRVUP I HAVE THAT SET UP ON AN ALERT..
SPX---ON COURSE FOR THE JULY LOWS AT 780...BROKE YET ANOTHER DB THAT'S 3 IN A ROW..AFTER BREAKING THAT SPREAD TRIPLE BOTTOM AT 870 IT'S BEEN IN A FREE FALL...ALL RALLIES ARE SHORTS..830 THE 3BXRVUP 850 THE 20 EMA DCC A TRIPLE TOP AREA AN HEAVY O/H R...
VIX---WELL THIS IS SHOWING REAL TROUBLE AHEAD ME THINKS...IT BREAKS A SPREAD QUADRUPLE TOP AT 45 THEN PULLS ALL THE WAY BACK DOWN THE "RISING" BSL LINE..RALLIES UP TO BREAK ANOTHER TOP AT 47, PULLS BACK AGAIN TO THE BSL AND RALLIES UP LAST WEEK TO TAKE OUT 47 ON A PRINT OF 48..MY UPSIDE IS "STILL" 56/57"..THE HORIZONTAL COUNT(HC) ON P&F IS 69...ALSO THERE'S A PERFECT PENNANT FORMATION ON THE DCC, CHECK THAT OUT FOLKS..ALL OF THIS IS NEGATIVE...
VXN---NOW THIS IS EVEN WORSE...A LOT OF IF'S HERE FOLKS..AND BUTS TOO<VBG>...WE ARE RIGHT AT VERY HEAVY O/H R AT 61 THE TRIPLE TOP AND THE BRL LINE..SO DYNAMIC RESISTANCE THERE...63 IS THE DEATH BLOW TO THE MARKETS..THAT WOULD SIGNAL A BIG BREAKOUT AND LOWER PRICES AHEAD FOR THE NDX--SPX--QQQ'S ETC...OF COURSE THE VIX WOULD BE FLYING UP TOO...NOT A VERY PRETTY PICTURE...I CAN SEE THIS INDEX MOVING UP TO 71...
SPOOOS--SPZ2--US02Z---THE FUTURES HAVE SIGNALED THIS DOWNTURN ALL ALONG..GET USED TO READING THEM AND USING THEM IN YOUR TRADING..WHILE WE DO NOT TRADE THEM, WE MUST BE AWARE OF THEIR IMPORTANCE...THIS INDEX BROKE DOWN AT 868 A SPREAD QUAD BOTTOM BREAK..PLUNGED TO 816...IT HAS GIVEN 2 MORE CONSECUTIVE SELL SIGNALS AND NO LET UP IN SIGHT YET..THE JULY LOWS ARE AT 776..DO WE HOLD?? OR CRASH...WE ALSO CONTINUE TO MAKE LOWER TOPS HERE...EVERY DAY LAST WEEK WAS A DISTRIBUTION DAY..EVERY RALLY WAS MET WITH WAVES OF SELLERS, FROM THE 857 TOP THEN 850- THEN 840 THEN 830 AND DOWN TO 800..NEGATIVE AS YOU CAN GET..."I THINK"...HAHAHAHAHAHA...THE 20 EMA IS AT 850 NOT SURE WE'LL SEE THAT BUT IT IS POSSIBLE...50 POINT MOVES IN THIS INDEX ARE COMMON PLACE...
OK HERE'S THE STOCKS TO WATCH THIS COMING WEEK...
WE HAVE EARNINGS THIS WEEK....HERE'S A PARTIAL LIST OF IMPORTANT STOCKS
APOL---PEP---ABT---DNA---RMBS<G>?--YHOO---COST---JNPR---GE---GAP...JUST TO NAME A FEW..
MAYBE WE WILL PLAY SOME OF THESE...
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GE---RIGHT AT A DB HERE AT 24...BEARISH DCC THO...24.75 THE BTL(BUY TRIGGER LONG)...23 THE SHORT SALE ..TRIGGER(SST)...
JNPR---LOL--WANNA PLAY A TINY ONE? EPS AH ON THURS...5.10 THE BTL...4.50 THE SST...HEY IT'S YOUR MONEY..HEHEHEHEHEHEHE MAYBE IT WILL RUN UP HERE AHEAD OF THE NUMBER....IT JUST DID A 3BXRVUP..
COST---SLOW MOVER BUT READY TO PLUNGE I THINK..I LOOKED AT THE RETAILERS..MAN THEY GOT MURDERED..ANYONE SEE THE GAP?...OH I NEVER SHOP THERE<G>...30.80 THE SST..IF IT BREAKS 30 STAY SHORT IT'S HEADED FOR 25...SWING TRADE IT...32 THE BTL...EPS BEFORE THE BELL THURS.,.
DNA---IT'S UNDER THE BRL LINE BUT HECK WHAT STOCK ISN'T?...EPS WEDS AH...31.60 THE BTL...MUST TAKE OUT 33...30.50 THE SST...
APOL---TUES BEFORE THE BELL...REALLY CRACKED LAST WEEK WITH ALL THE SCHOOLS AND BUSINESS PRODUCT SECTOR..AND ON VERY HEAVY VOLUME TO THE DOWNSIDE ON FRIDAY CHECK THE DCC...39.40 THE SST..ANY PRINT OF 38 STAY SHORT...41.40 THE BTL...
ABT---IN THE DRUGS SECTOR..REPORTS BEFORE THE OPEN ON WEDS...ABT IS IN A RISING WEDGE PATTERN HERE ON THE DCC..AND IT'S RIGHT NOW TOUCHING THE BRL...AT HEAVY R...42 THE BTL..WAIT FOR IT...43 BREAKS THE BRL LINE 44 WOULD BE GREAT...39.95 THE SST...38 IS BAD STAY SHORT...
OK LET'S WATCH THE MARKETS DIRECTION FOR THOSE STOCKS....HERE'S SOME REGULARS TO TRADE TOO..
MCHP---ONE OF MY FAV'S HERE..BROKE A TRIPLE TOP BY 2 BOXES FOR CONFIRMATION OF THE BREAKOUT..TOUCHED 22...REVERSED DOWN 3 BXS LAST FRIDAY...20.55 THE BTL...AND OF COURSE IF IT TAKES OUT 23 WE'RE HOME FREE..MARKET WILLING...18.95 THE SST...
QLGC---REALLY GOT MURDERED LAST WEEK...AS ADVERTISED I SAID 18 WAS MY TARGET...AND THERE WAS VERY LARGE VOLUME WITH THAT DISTRIBUTION SELLING...IT'S BELOW THE BOTTOM OF THE 10 WEEK..SO IT'S SHORT TERM VERY OVERSOLD...21.90 THE BTL...24 THE 3BXRVUP...19.90 THE SST...EXPECT A BOUNCE SOON HERE...
KLAC---JUST KEEPS MOVING LOWER AND LOWER..ALTHO THE SEMIBP IS AT 8%...27.50 THE BTL...26 THE SST..
AMGN---SOLD OFF LAST FRIDAY ON VOLUME...GOING TO REVERSE DOWN HERE...42.50 THE SST...44.50 THE BTL...
MSFT--MOVING LOWER WITH THE MARKET...CANNOT REVERSE BACK UP AT 47..STILL IN A COLUMN OF O'S HERE...42.75 THE GOOD SST...44.90 THE BTL...
CHIR---IT'S STILL HOLDING LIKE A ROCK SO FAR...AT A DOUBLE TOP ON THAT PRINT OF 37 FRIDAY..HAS DYNAMIC SUPPORT AT 34 WITH THE BSL LINE THERE TOO..UNLESS IT BREAKS 33 THIS WOULD BE A GREAT "LONG" CANDIDATE FOR THE COMING RALLY...36.50 THE PERFECT BTL...34.60 THE SST..WITH ANY BREAK OF 33 REAL TROUBLE..
CCMP--THEY ARE REALLY POUNDING THIS ONE...JUST BROKE A TRIPLE BOTTOM AT 35..DCC LOOKS LIKE CRAPOLA...J-LO(JULY LOWS)<VBG>...WILL GET TOUCHED FOR SURE...33.80 THE SST...35.60 THE BTL...
QCOM---HOLDING WELL FOR NOW...30.25 THE BTL...28.26 THE SST...31 IS STILL HEAVY R AT THE TRIPLE TOP..32 BLOWS IT UP AND OUT..
EBAY---LOOKS WEAKER AND WEAKER..BREAKS ANOTHER DB AT 53...HIT 51 MAY GO TO 44..THE BOTTOM OF THE 10 WEEK...53.50 THE BTL...THERE WAS SOME BUYING INTEREST LATE FRIDAY...51.40 THE SST..
AMZN--IT MAY MOVE ON THE YHOO EPS THIS WEEK..IT'S UNCONFIRMED FOR WEDS AH...YHOO THAT IS..SO MAYBE WE CATCH AN UP MOVE IN AMZN IN SYMPATHY...17.25 THE BTL...18 THE DT BUY SIGNAL...15.75 THE SST...
IBM---AND I WAS ACTUALLY SHORT THIS DAMN STOCK AT 64.25? HOLY COWSKI BOYS AND GOILS<G>...WELL IT HIT MY DOWNSIDE TARGET OF 58 AND THEN SOME..IT LOOKS LIKE A WARNING IS COMING...IT IS AT THE BTOF10WK(THE BOTTOM OF THE 10 WEEK TRADING BAND)...55.50 THE SST...57.75 THE BTL...THIS IS STILL A SHORT ALL RALLY STOCK..
CEPH---CHART LOOKING WEAKER HERE...NEGATIVE STICK ON THE DCC ON FRIDAY...THE DOUBLE TOP AT THE BRL HAS NOT BEEN BROKEN...38 THE SST...AND A TRIPLE BOTTOM BREAK ON P&F..A GREAT SS THERE...40.25 THE BTL...
IDPH---THIS CHART LOOKS WORSE..AND ALL LAST WEEK SELLERS CONTINUED TO HIT THIS STOCK EVERYDAY...IT BROKE A SPREAD TRIPLE BOTTOM LAST WEEK AND BROKE THE BSL LINE TOO..VERY VERY NEGATIVE...35.40 THE SST...BTW 28 IS THE BTOF10WK..WHOA...28?...37.75 THE BTL..WAIT FOR IT PLEASE...
MMM---A DOW STOCK...RALLIED UP AND INTO O/H R AT THE 20 EMA DCC...SITTING ON A HANGING MAN STICK HERE...MADE A 3BXRVUP... AT 114...BUT THERE'S A DB AT 110 RIGHT AT THE BSL..I'M BETTING IT CRACKS THAT DB AND THE BSL...115.70 THE BTL...13.25 THE SST...ANY BREAK OF 110 THIS STOCK WILL PLUNGE..100 IS THE TARGET...
I AM STILL ULTRA CAUTIOUS HERE..THE MARKET IS "NOT" DONE CORRECTING...AND WE HAVE MACRO CYCLE LOWS JUST AHEAD...UNLESS WE CHANGE THIS CURRENT TREND...THIS MARKET IS HEADING MUCH LOWER...YOU STAY ON THE SIDELINES..CONTINUE TO DAYTRADE, SCALP AND SLEEP WELL AT NIGHT...
HAVE A GREAT TRADING WEEK..EARNINGS SEASON IS WITH US...BE COOL FOCUS AND STAY ALERT...
WARMEST REGARDS TO YOU AND YOURS FROM ME AND MINE..
JERRY
Jerry Olson
MasterClassTraders.com
jerry@masterclasstraders.com
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