Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: donald sew who wrote (37975)	3/6/1999 10:13:00 AM
From: Robert Graham	Read Replies (2) of 94695

Seeing this two consecutive day move up by the market under increasing volume should not of come as a big surprise. The market had demonstrated an underlying strength that apparently many did not want to see for some reason. I agree that it is important to look at the new lows and new highs statistics rather than the advance to decline line for evidence of a continuation of this rally. But evidence may not come immediately during the first run up. However, the number of advancing issues to declining issues is continuing to improve. The DJIA is where the action will now be, and the S&P 500 needs to validate the move up by the market. NASDAQ needs to break 2300 and the DJIA needs to remain above its 9759 high which may require more than one attempt to do so. The S&P 500 needs to break through its 1283 high. Look now to the bond market for a lead for they appear to be in synch again. The technicals of the market do not give the whole picture. At times they can lead you in a direction opposite of the markets direction. This particularly happens during junctures in the market like the one we have been experiencing under light volume. Technical indicators at market junctures can give conflicting signals. Also the volatility that has been in the market whipsaws and confuses many technicians, even some of the more experienced ones. Some are saying that this is a rally that is a natural part of a broader longer term market top. Others are saying that this is a technically based rally. While the former may be true, traders do not trade in the longer term picture of the market. Much money can be made on these market swings before any selloff occurs. Monday will help determine if the latter technical rally story is true. The S&P 500 to me is what to look at as an important indicator in validating the current market's direction. Besides watching the volume and breadth figures for clues. Also noting what key stocks continue to participate in this rally is also helpful. Take this one step at a time. My longer term concern is the future leadership in the market. The techs have demonstrated in the recent past a patterns of selling into market strength. The techs are continuing to demonstrate some leadership that unfortunately is being met with selling pressure. Time will tell. Actually I think predicting where the market is going is a fool's game. This is particularly true for the longer term. We are here to make money. You do not need to be able to predict price action in order to profit from it. Trading on expectations is a different matter. Comments welcome! Bob Graham

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