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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 659.00+1.0%Nov 21 4:00 PM EST
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To: StockOperator who wrote (11970)4/25/1999 10:44:00 PM
From: Smooth Drive  Read Replies (2) of 99985
 
Hello SO,

I know you didn't ask me about interest rates but I have been thinking about them a great deal lately. I think it's very interesting right now in the interest rate environment. Especially with my P&F Dow Jones 20 Bond Index, TYX chart and DJ Utility Average charts giving conflicting signals.

I've written previously about the Dow Jones 20 Bond Average Index P&F chart at Message 7842134. It currently looks like:

107.00                                          X   X
106.08                                          X O B O
106.06                                          X O X O
106.04                                          A O X C
106.02                                          X O   2
106.00  2                                       X     O < DBS
105.08  X O                                     X     O    
105.06  X O                                     9     O
105.04  X O                                 X   X     O
105.02  1 O                                 1 O 7     O   
105.00  X O                                 X O X     O
104.08  C 3                                 C 4 X     O
104.06  X O                             X   B O       O
104.04  X O                             X O A         O
104.02  B O                             X O X         O
104.00  X O                 X           X 8 X         O
103.08  A O < High Pole     X O X       X O X
103.06  X O                 X O X O 2   7 9
103.04  X O                 X C X O X O X
103.02  X 4                 B O   1 X O X   
103.00  X O                 X     O   3 X
102.08  9 O                 A         O X
102.06  X O X           X   X         O X < Low Pole
102.04  X O X O         X O X         O 6
102.02  X O X O         X O X         O X
102.00    O   5   DTB > 8 O X         4 X
101.08        O X   7   X O X         O 5
101.06        O X O X O X 9 X         O X
101.04        O X O X O X O           O X
101.02        O   6   O X             O
101.00                O
100.08
        9                         9         9         9
        6                         7         8         9

When this chart reversed down on Feb 4, the TYX closed at 53.02. Friday's close was 55.89. The above chart would need 104.6 in order to reverse. And, it would need to then rise to 105.6 for a Low Pole buy signal. But on Friday it closed at 104.02 -- it is rising but very slowly.

The current TYX chart looks like:


57.25                                        
57.00         X   * < Unofficial Bearish Resistance Line
56.75     X   X O 4 *       + < Bullish Resistance Line
56.50 X   X O X O X O *   +
56.25 X O 3 O X O X O   * 
56.00 X O X O   O X O +   X
55.75 X O X     O X O X   X
55.50 X O       O X O X O X
55.25 X         O X O X O X
55.00 X         O X O X O X + < Revised Bullish Support Line
54.75 X         O X O X O +
54.50 X         O   O X +
54.25 X             O +
54.00 X             +
53.75 X
53.50 X
53.25 X

You can see that since the double bottom sell signal at 54.25 it has come back fairly strong with higher tops and bottoms and gave a double top buy signal at 56.00 on Thursday. It's sitting right on the Bearish Resistance Line and there is a Bullish Resistance line at 56.50. This chart is long term bullish (as it's trading above it Bullish Support Line which is down at 53.75) and short term bullish as it's on a buy signal. Its bullish price objective is 58.75

Now, what I find interesting is the fact that the Dow Jones Utility Average is also showing strength. I updated it today at homestead.com.

We all learned in bonehead investing about the interest rate teeter totter. As rates go up, bonds/dividend paying stocks go down -- and visa versa. So how is it that the DJUA is going up, and interest rates look to be strong as well? Well, I don't think they will both go up for long.

It will be interesting to see how this plays out.

Take care,

Eric
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