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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 670.92

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Nov 7 4:00 PM EST

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To: William H Huebl who wrote (84)	12/3/1998 7:29:00 AM
From: dennis michael patterson	Read Replies (1) of 99985

Test of 8760? THE TECHNICAL REGISTER By Mr. Chartist December 3, 1998 POSSIBLE PLUNGE AHEAD It was ominous that Wednesday's confirmation failure of Tuesday's bullish hammer also ended the day with another hammer. On closer inspection, in both the 30-minute and 60-minute candlestick charts, trading ended with shooting stars. These are potentially negative indicators. The DJIA nearly tested the 27-day EMA support level on Wednesday. Any hesitation in Thursday's trading could lead to a 200+ point drop on Thursday or Friday, possibly testing the 8760 support level. Meanwhile, the NASDAQ composite bounced from its 9-day EMA support unfazed by any developments outside the Internet/Tech arena. The sole technical indicator confirming the high likelihood of a serious decline is the rapidly closing divergence in the MACD. Secondary indicators, such as the declining Slow Stochastic lines and the doji star following Tuesday's bullish candle, also suggest an additional retreat. INTERNET STOCKS We believe the first-tier Internet stocks are in for a severe drubbing: YHOO, AMZN, XCIT, LCOS and SEEK. BANK STOCKS There is more downside to the bank stocks than we have recently seen. Continue shorting the major financial stocks that we previously recommended. OIL STOCKS The downdraft in oil stocks may have reached its peak, opening the door to a slight recovery Thursday, Friday and possibly Monday. We will apprise you of developments in this sector tomorrow.

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