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To: Teresa Lo who wrote (26465)	7/2/1999 4:44:00 AM
From: Teresa Lo	Respond to of 44573

Market SnapShot for Friday, July 2, 1999 The S&P and NASDAQ 100 set new closing highs yesterday on the lowest market volatility index (VIX) reading recorded in 1999. A low VIX reading is interpreted as complacency, or a lack of fear, usually seen near market tops. A high VIX reading is usually seen near market bottoms, as panic grips the market. Bernard Schaeffer wrote an excellent article consensus-inc.com on the application of VIX and Bollinger bands as a short-term predictor of market directions. Mr. Schaeffer said, “As an oscillating indicator, the VIX generally helps us predict future market performance by gauging the level of fear in the market following a pullback. Although a complete discussion of how the VIX and OEX are related is beyond the scope of this discussion, our research has shown that a generally inverse relationship exists between these two indices. The Bollinger Bands we use are drawn two standard deviations above and below the VIX 21-day moving average. Because the VIX oscillates, a break above the upper band indicates that the index has reached an extreme high and will shortly begin to move in a downward direction. This band break would therefore be a bullish sign, since the OEX and VIX are inversely related. Conversely, a VIX move below its lower band would have bearish implications.” We have duplicated his set up for our readers here. You will note that this is model is intended to serve only as a guide to market sentiment and should not be used as a market timing device. Given its limitations, we can still make big picture observations, such as the high of July 1998 was made at a relatively low VIX and the low of October 1998 was made on an extremely high VIX. The market is at a critical juncture with the major indices making a test of top. The S&P 500 and the NASDAQ 100 indices are in the process of testing their old highs. The Dow Industrials are not far behind. The Dow Transportation average is seriously lagging behind, not confirming the rally in the Dow Industrial average. The CBOE Internet index is trying to break to the upside through the neckline of a head and shoulders bottom pattern. The September Treasury bond was met with selling today on the heels of a strong National Association of Purchasing Managers report. It needs to break 116^08 on the upside to confirm that it has reached a short- term bottom. What the market needs to do immediately is to clearly break resistance at the old highs and gather momentum to the upside in order to keep sellers away. Have a great Fourth of July long weekend. Charts specific to these comments have been posted to intelligentspeculator.com

To: Teresa Lo who wrote (26465)	7/9/1999 3:21:00 AM
From: Teresa Lo	Read Replies (1) \| Respond to of 44573

Market SnapShot for Friday, July 9 The market did a test of top yesterday as expected but traded within the boundaries of a sideways consolidation. The September S&P futures contract did not go to new high ground. Resistance above is at 1416 and 1417.50. Key support is 1395.20, with additional support around 1390. If the SP9U trades back into the 1390 area on volume, traders may conclude that the recent advance is a false breakout. Most of the major market indices consolidated as well and, on the intraday charts, are in the test of top position. The September Treasury bond, which had made four inside days in a row since June 30 at resistance at the 20-day moving average, broke in both directions before closing up, ready to test the recent high of 116. VIX dropped again yesterday, with 113 new highs and 47 new lows on the NYSE, deteriorating a tiny bit from earlier in the week. If the market is going to go higher short-term, it must do so immediately to hold onto momentum. Charts specific to these comments have been posted to intelligentspeculator.com