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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: Matthew L. Jones who wrote (82)	6/9/1999 12:27:00 AM
From: J.T.	Read Replies (1) \| Respond to of 19219

MLJ, We have a schizophrenic market going on right now. A bi-polar personality. Here's why: 1) The equity boys in the pits at the CBOE got it started and had their way on Friday and Monday with dictating market direction to both the bears and bond boys by running through nearly all upside resistance levels. In fact, they ran with it so hard that it nearly broke my upside band R3 DOW 10,887 on two consecutive trading days (post 59).But Harry "THE BULL" Houdini disappeared. It closed once above this level at 10,909, and now we are back in DOW R2 range 10,750 via 10,766. 2) I mentioned psychological 6% long bond level and the screen and roll-over act briefly in post #69. Simply put: now the BOND BOYS ARE IN CONTROL AND HAVE WRESTLED MOMENTUM AWAY FROM EQUITY NIRVANA BULLS. If we have two closes above 6% bond yield and it sticks, we are headed right back down. Money will flow from stocks to bonds as bonds highly competitive and attractive with much less risk at these levels than stocks. 3) VOLUME WAS PATHETIC ON THE TWO UP DAYS AND IS NO WHERE NEAR THE BLOW-OFF RECORD VOLUME WEEK PUT IN APRIL 15-22. This, coupled with weak advance/decline readings (1.7 to 1 Friday and 1.4 to 1 on Monday) is not the stuff to propel us off the ground and launch us into orbit to significant new highs. On the flip side, today we were 17 to 11 decliners over advancers but new highs beat new lows 1.4 to 1 on NYSE and 2 to 1 on NAZ. 4) Which leads us to the next question: Can the market make new highs? I believe the answer is yes <IF> bond yields immediately retreat below 6% and inflation numbers for PPI and CPI show up benign. Nevertheless, I think if this does occur, it will be token new highs that will not be confirmed across the broad indices spectrum. Maybe an additional 3% to 5%. But I have placed my bet it won't happen. I was able to pick up additional out of the money DJX July puts extremely cheap yesterday (Monday) in the face of the snorting bull herd in the afternoon when the DOW was up 80. 5) There are definite strengths in this market. The SOX index is extremely strong and held firm. If you see SOX sell below 400 you know the correction is heating up in the broader indices to lower lows. SOX is now lead barometer for bulls testimony to shine. RUT is also strong and held up well. Below 430 RUT and more bear testimony will ensue. For the Bears, VIX is heading back up and BKX is still relatively weak. Bond yields consummating with 6% or higher and bulls lunch will be had. Just a brief synopsis. Hope all is well with you. Best. J.T.