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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: briskit who wrote (23808)	8/25/1999 4:50:00 PM
From: HairBall	Read Replies (1) \| Respond to of 99985

mike douglas: Who knows the general composition of the COMPX? nasdaq-amex.com Regards, LG

To: briskit who wrote (23808)	8/25/1999 5:11:00 PM
From: James F. Hopkins	Read Replies (2) \| Respond to of 99985

Mike; I've been looking for a pull back of some sort, and missed this last runup as I had to go long to cover my short fund. The DVI is strong as all get out; I anticipated it weakening but was fooled, I won't try to out guess it again. We may get a drop tomorrow but the trend is up. Jim

To: briskit who wrote (23808)	8/25/1999 5:51:00 PM
From: Matthew L. Jones	Read Replies (7) \| Respond to of 99985

Mike, No, I didn't cover (that is the beauty of buying options-- you lock in your "stop" at purchase). In fact I stole 10 more contracts and almost stole 10 more but I was too slow. I'm now 40 contracts short on the QQQ. Unless this rally is going to defy history, its age is much like that of a 140 year old man smoking 3 packs of unfiltered Camels a day, while holding on to his oxygen tank with the other hand. Personally, I wouldn't go long on his chances of winning the Boston Marathon! <gg> My computer model shows me the following: 1) Extent of current rally 16.32% from August 10 low of 2120 on $NDX. The average uptrend extent is 10.57%. The odds of reversal at this level are 5.96:1. 2) The duration of this intermediate trend is 13 trading days. The statistical average duration is 11 days. The odds of reversal at this duration is 1.81:1. 3) The absolute movement over a one week period is 8.59% (this refers to the slope of the move). The average one week move is 2.35%. The odds of reversal based on this alone is 25.1:1. The absolute movement over a two week period is 11.5%. The statistical historical average for a two week absolute gain is 3.41%. This produces odds favoring a reversal of 23.61:1. 4) Today is the 4th consecutive "up" day versus an historical average of 2 days. This calculates to odds favoring a reversal of 13.44:1. 5) Now lets look at risk reward odds. This is calculated by marking resistance and support levels and calculating how far the current price is from each target level. As you probably know, there are a lot of ways to calculate support and resistance, but my personal favorite is using Bollinger bands. I typically use a 2 standard deviation move off of the 20 day simple moving average. As you probably know, one standard deviation includes 92.5% of all trades and two standard deviations include over 99% of all trades from the moving average. Look at a historical chart and you will see the statistical validity of this method. Well, today is the third day in a row which we closed above the upper band. Statistically, this is a rarity. The lower band is 317 points away at 2144 (although tomorrow it will be lower in all likelihood). This give an upward potential of -60 and a downward potential of 317. Kind of high risk return. 6) When I average all of the odds I get 86.78:1 odds in favor of a reversal. On average, reversals have retraced 2/3 of the most recent intermediate movement and have statistically averaged 7.34% (2285 on the $NDX). Two thirds of 10.93% or roughly 2196 on the $NDX is more likely. 7) Other factors to consider are a short term RSI of 74% (historically pretty high) and a Stochastic sell signal. I couldn't help but put my money on the downside. I've been wrong many times before, and will be many times to come, but that's my best analysis. Hasn't everyone become a bull now? That's a good contra indicator. Take it for what its worth. It is a good exercise for me to go through the process of compiling the numbers. Matt