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Strategies & Market Trends : Tech Stock Options
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To: Patrick Slevin who wrote (49974)8/16/1998 5:07:00 PM
From: Gersh Avery  Read Replies (1) of 58727
 
Hi Patrick .. Nice to see you back!

Also nice to see Lisa back also.

Some notes on rate of change of the moving averages of the S&P

The rate of change in the 200 day simple moving average maxed out on 7/23/98 with a average rate of change of about a 1.8 point gain per day.

As of the close Friday our current rate of change has dropped to ~0.8 per day.

Projecting out:

If we were to maintain the S&P @ Fridays close of 1062.75 the 200 day simple moving average trend line would turn negative on 10/1.

If we were to maintain our current 50 day rate of change then the 200 day would turn negative on 9/11.

If we were to maintain our current 20 day rate of change then the 200 day would turn negative on 9/4.

At whatever date we cross the line from positive to negative the old "just but and hold" idea will be dead.

We have already blown apart the "buy the dip" idea. Each time we drop more buy the dippers are getting their fingers burned.

You noted that there seemed to be some strong support at just below the 1060 level for the cash S&P. I believe that was as a result of being near the 200 day average line. For several times in a row we have hit the 200 day and bounced back strongly. We have a problem now. The 200 day average has been moving up while we have stayed the same or falling further. At this time we are ~ 30 points below this average with a high probability of a nasty day Monday.

Soooo .. at this time the 200 day average just may have turned into a resistance line instead of a support line.

Again, nice to see you back.

Gersh
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