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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Teresa Lo who wrote (27826)	7/21/1999 3:51:00 AM
From: Teresa Lo	Respond to of 44573

Morning Market SnapShot for Wednesday, July 21, 1999 No sooner than we said the words, “so long as any pull back finds support at the 1380 area, there is no cause for concern”, we find ourselves here at the moment of truth. The S&P 500 index broke the recent uptrend line yesterday and closed slightly under support at the 20-day exponential moving average (EMA). On this pull back, it will be very important for the market not to close under the May high, or else it could be faced with another situation similar to July 1998, a very large failed breakout. In fact, the market made an all-time high a year ago yesterday on the predictions of many market technicians who follow cycles. A closer inspection of July 1999 vs. July 1998 reveals some interesting similarities, even if they are purely coincidental, for both highs were made on the lowest CBOE Market Volatility Index number for the calendar year. Both highs came upon a breakout from a multi-month trading range. Both highs were followed by an outside-down day before another large expanded range down day. Visually the charts are similar in terms of where both the 20-day EMA and the 50-day moving average lie. Where to now? The first area of support is the 20-day EMA. The S&P 500 index is testing this level right now. If the market remains in an uptrend, and this is not a failed breakout, buyers should show up in this area shortly and we will be on the lookout for them tomorrow. In the meantime, there has been a dramatic deterioration of new highs, now only numbering 1:1 as compared to the NYSE 52-week new lows. The resultant 10-day moving average of the net high/low differential is now dropping, itself not having made a new high along with the market as compared to the peak in May, which, as we have stated, is a nagging divergence. Let's look at the other popular market indices. The Dow Jones Industrial Average did not perform at all over the past few weeks compared to the S&P 500 Index. It never left the trading range that had it trapped for a few weeks, and has traded back into the May highs. This is bearish. The Dow Jones Transportation Average never even came close to making a new high over the past week, and that is a glaring non-confirmation of the marginal new high made by the Industrials. The NASDAQ 100 is in a similar position as the S&P 500 Index, having broken the recent uptrend and is now in a position to test support at the 20-day EMA on this pullback. Charts specific to these comments have been posted to intelligentspeculator.com