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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 665.67

-0.9%

Nov 17 4:00 PM EST

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To: j g cordes who wrote (594)	12/6/1998 3:25:00 PM
From: stockycd	Read Replies (2) of 99985

All, Wow guys! I just got finished looking at my weekly charts for all the major indicies. My conclusion is that this coming week is of major significance in relation to the mid-term direction of the markets. Observations (weekly charts analysis) 1. A double top may have formed on the DJIA and NASDAQ. If we finish next week higher than we start the week, we may have a chance to break the double tops. If we close next week lower than we open; I'm afraid a short (few weeks) term down trend may precipitate which could lead us to lower levels for the DJIA and the NASDAQ. 2. It appears that a rising wedge has formed on the Transports. If this is the case, I would expect resolution of it in the next couple of weeks with a drop to the 2945 area. 3. A morning star candle pattern has formed on the DMARK/DOLLAR exchange index. This signals further strengthening in the DMARK thus implying overall weakness in the dollar. 4. The only show of iron-clad strength is the SOX. The weekly candles indicate no slowing down. If the overall market is getting weaker, however, a "evening star" candle pattern should start forming. A signal for this would be modest gains next week with a sharp drop beginning the following week (expiration)week. If last week was the start of another major decline, I would expect next week to be flat to slightly down, with acceleration downward during expiration week. My outlook has turned neutral short term with a lean to the bearish side mid term. If last week's sell-off continues, I place the DJIA at 8390 within 3 weeks; the NASDAQ at 1693 in 4 weeks and the TRANSPORTS at 2800 area by Christmas. With the FED babysitting the markets, anything is possible but I have a feeling that another rate cut is partially priced in or a cut could not produce the same rally as before. My opinions only, Chris

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