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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote (23980)8/11/1998 8:47:00 PM
From: Bull RidaH  Read Replies (2) of 94695
 
Bill,

I have to agree that there are ominous signs for the bears that we may not get the big market break just yet. Major Indices made lower lows today than last Wednesday, but we did not get confirming new lows from "new 52 wk. lows", or from the McLellan Oscillator. And as you mentioned, a somewhat bullish candle stick pattern was drawn, which matches up nicely for the bulls with last Wednesday's hammer day.

In the futures, which I feel are better to utilize for daily candlesticks due to their ability to gap, it appears as though today's gap down open and sizeable trading range followed by a close near the open produces a line closer to a long legged doji, which of course signals indecision about the current trend, and a possible s-t reversal in trend. The upper shadow is too large to classify it as a hammer though. So I believe one would need confirmation of a higher close than today on the futures to establish that the s-t downtrend is broken.

My wave analysis calls for a minimum 20 SPX selloff from the early highs tomorrow. If the market then rallys from this selloff and produces a higher close than today, then I would agree with you that the s-t downtrend is over. But I believe we test the low 1060's hi 1050's one more time tomorrow before the market has a chance of mounting a recovery from this 17 trading day onslaught of selling. I would expect a recovery rally to see something around 1127 SPX if we see a rally from tomorrow's lows that closes above 1077 (based upon an upside break of the 3 week down channel).

Regards,

David
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