This is off tpoic But for excellent short term calls on the market (updated weekly) check out the following site....
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THE MARKET (As of the close 1/31/97)
About two weeks ago most popular market averages reached the top of their rising trend channels (drawn from the July 1996 lows), then they reversed sharply, breaking the short-term rising trend line (drawn from the January lows) and moving back to the equivalent of the horizontal support at Dow 6600. As of Friday market averages had completed a technical snapback move off support back up to the short-term, recently violated rising trend line.
It is my best guess that the next move over the next few to several weeks is going to be down, first challenging the newest rising trend line (drawn from the December 1996 lows and the lows of last week), then testing the horizontal support at 6600. Finally, there will probably be a test of the bottom of the primary trend channel (drawn from the previously mentioned July lows) which will come into play at around 6550. This trend line may fail as well.
One of the problems facing the market is interest rates, which are in a short-term up trend (see below), and are due for another spurt upward at the same time the market is challenging all-time highs.
Other problems can be found in the array of market indicators we follow:
(1) The McClellan Oscillator (McOsi) has dropped to about -100, bounced up and appears about to top below the Zero Line. While the McOsi Components (the 5% and 10% indexes) are above zero, they are about to top in a strong negative divergence and could drop well below the Zero Line.
(2) Both the Short-Term Volume Oscillator (STVO) and Swenlin Trading Oscillator (STO) look as if they will also top below zero at the same time the market is topping near record highs -- two more negative divergencies.
(3) The Intermediate-Term Breadth Momentum (ITBM) Oscillator is still headed down. While it is above zero and appears to be decelerating, my opinion is that the next market move, which I believe will be down, will prevent it from bottoming and it will continue downward below the zero line.
(4) New Highs have been contracting at subsequent market tops since they peaked in December.
Assuming my assessment is correct (and we know that isn't always the case), we will have the market topping near record highs and heading lower goaded by rising interest rates, while short-term breadth and volume indicators (McOsi, STVO, STO) top below zero. All the while our best IT breadth indicator, the ITBM, will be heading toward negative territory.
Further, assuming that all this comes to pass, and that's asking a lot, the next thing we could see, might be an ITBM top below the Zero Line, which would herald the beginning of an accelerating down move. But this is still some weeks away.
I plan to remain on the sidelines until either: (1) we see new highs and an ITBM bottom, at which time I would consider a new IT Model BUY Signal, or (2) the market and our ST indicators top out, at which time I will consider opening an IT Model SELL Signal. I think option two is the more likely.
Short-term players should be looking for an opportunity to short the market on Monday because Friday definitely looks like a short-term top.
************************************************* The Decision Point Daily Trader's Report is specifically designed for short-term traders and for those who use short-term timing to optimize entry and exit points from longer term positions.
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Jim:
In the many years that I have been trading, the "McClellan Oscillator" and the McClellan summation index are the most useful indicators in my book.
This Oscillator is updated daily (in the old days I would create the paper graphs <ug!>. Sell when the oscillator is above 1000, buy when -1000. If you are quick on the trigger sell when it is +500 and buy at -500.
Novell may follow it's own pattern as it seems to be reacting to (1) positive earnings news, (2) expectations of new CEO and/or (3) possible rumor for buy out.
EKS |
