Peter eliades say his bearish pattern negated. Breadth doing something it has never done before.
Peter Eliades' Stockmarket Cycles update for Wednesday, May 5, 1999.
Today was the 30th day of the churning pattern, but it tried hard earlier
in the day to break the streak. The advance-decline ratio got down to .588
intra-day, that's the lowest intra-day ratio reading in several weeks of
trading. The lowest intra-day reading, mind you. A Sign of the Bear signal
could have set us up for a potentially very bearish resolution over the
next few weeks, but now, of course, we lose the pattern completely. As we
have noted before, it could still lead to a bearish resolution, but the
factors that have led to a classic pattern in the past have now failed to
appear. There have been some very negative resolutions off the churning
pattern that went longer than 27 days, but they generally have not been
classic bear market patterns. We also have to be watchful over the market's
internals which are improving more than could be expected if it were
following in the footsteps of the 1929 or 1972-73 pattern which was
exhibited between January 8 of this year and March 23 when the daily
advance-decline line made a new low below the October of '98 low. Despite
the positive closes on most of the indices today, and the slightly positive
advance-decline line, 1565 stocks up and 1444 down, the McClellan
Oscillator actually moved to its lowest reading in over three weeks today,
although it did remain well into positive territory at a +79 reading. It
appears as if breadth is in fact accomplishing something it has never done
before in history. That is it is trying to turn from the worst measurable
breadth divergence in history to positive readings, once again. The
McClellan Summation Index which has +1000 as a neutral reading is actually
approaching the +2000 level with a reading today of +1878. If breadth
expands again from here over the next few days along with the popular
averages in their up-trend, there will be little left to make a short term
bearish argument about.
Stock Index future traders, we shorted a break of 1329.10 on the June
S&P and it looked good as the market broke down to 1322, but the strong
rally from there stopped us out at 1338.90 with a loss of $9.80. Tomorrow,
we believe the rally must stop almost immediately or significantly higher
prices will be seen. We are going to try to sell early tomorrow with a
short sale at 1354.50 market if touched with a very close stop at 1359.50.
Obviously if they open above the 1359.50 that instruction would be
canceled. If you are stopped out at 1359.50, you may go long on a pull-back
to 1356.90 with a stop at 1344.90. After that you may go short again only
on a break of 1329.00 with a stop at 1336.50.
The XAU exploded to the upside today, and a big question is whether
this is the start of something big to the upside or the end of an explosive
rally. To us it looks as if some upside projections are being approached
now around the 80-85 level. We will be watching it closely over the next
day or two. There are no new projections on bonds. Have a great day. We'll
talk to you tomorrow. |
