MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 660.19

-0.8%

Nov 18 4:00 PM EST

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To: StockOperator who wrote (12407)	4/30/1999 1:17:00 AM
From: StockOperator	Read Replies (3) of 99985

Pretty quite tonight. Allow me to take a few minutes just to recap today's trading. I think one of the most significant things happening right now is the rise in the utilities. As I said before we are witnessing the beginning stages of a major breakout. Tomorrow we will see another report released by the government. I have to believe that that report will be favorable to the markets simply because the DOW the last two days has set itself up for a breakout, possibly into the 11,000 range. The other avgs. have not positioned themselves as neatly for a move in unison with the big board. That's not to say it won't happen, but their patterns are just tougher to read. I do however, have upside targets for most of the indexes that I think should be met, especially when you consider that tomorrow ends this weekly and monthly timeframe. During the last couple of days I have tried to make the case for trading as cautiously as possible. Basically that implies that you trade the issues (long or short) that you feel comfortable with technically. There was a lot of money made playing both sides this week as evidenced by AMZN which was down from 220 to 165 in only three trading days. Or how about RNWK which rose 31 just today! Regardless of the market environment there are always plenty of opportunities to play both sides. To trade successfully in an individual company is one thing but looking at the overall trading of a cross-section of the market to include stocks and indexes is what makes MDA so difficult. A good example would be the current state of the transports. That index traded only seven points away from it's all time high today. It has also risen the last two days in a row despite the overall market weakness. But yet when you look at some of the stocks that represent that index like UAL, AMR and DAL you see stocks that are beginning to roll over or have rolled over already. Then again FDX (also in that index) which has been a stellar performer the past couple of months appears as if it could continue to move higher. On the DOW we have stocks like GM and JPM that appear ready to challenge their old highs, while MRK and GE have been under significant pressure lately. The message that I am trying to get across is that there are still many divergences out there. So for me at least it is too early to write this bull off. The interesting thing about the many cross-currents these past couple of months is that the market has been very successful in keeping people off track. Not too long ago many were complaining about the narrow breadth and lousy a-d line. It's interesting that with the late improvement in the market internals there really hasn't been much discussion about it. My guess would be that with many of the indexes trading at different points on their charts these divergences will most likely continue. I think it is important to remember that even in this enviroment the DOW has raced ahead almost 1100 pts. With one more day left in the week (month) I will wait until the end of closing tomorrow to assess the damage done. There are plenty of charts just hanging on a shoe string. As well as a few ready to charge into new highs. Prosperous trading. SO

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