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

To: Matthew L. Jones who wrote (23845)	8/26/1999 12:14:00 AM
From: Lee Lichterman III	Respond to of 99985

I agree that we need to let off some steam but I believe that the odds of an instant reversal due to comparing the odds in "normal" market conditions versus rallies immediately following "decent" sized pullbacks aka corrections requires a different slant. The signals on my charts are set to "normal" market conditions and I can say from experience and from betting wrong a few times <g> that I can not take my signals at face value during strong drops and strong rebounds after "abnormal" short term market trends. I had sell short signals for weeks following the rebound from last October as my systems read everything as too over bought. I am starting to get a lot of those type signals now but this is where we have to earn our paychecks. Upon getting each signal, I read the charts, review trendlines, weekly data, check prior support and resistance levels etc instead of my normal approach of just a quick scan and buying puts. I also wrote that post before seeing my charts tonight. I was just logging back on to start transfering them over when I decided to check in here and see what was being said. After reviewing my charts, I am getting further into the camp that the pullback should start soon but only due to the levels of movement in various indexes, stocks etc. As I checked the quotes after the close, the market looked strong, but after reviewing the charts, the moves up aren't as impressive as they first looked. I am not seeing a lot of important levels being violated to the upside yet although it still could happen. Also many of the leaders of this rally are already coming up on my scans as nearing their ends with the forks also showing them approaching or at resistance lines. Don't get me wrong, my bearish forks are falling like flies and the bullish forks are proving to be the correct ones to follow now. What I mean by the levels is the middle tines onthese bullish forks. The strength and duration of this rally will be judged by if the market decides to follow the upper half of the forks (more bullish) or the bottm channel (less bullish and shorter term) I agree with you that the trend is up and we should pullback soon but I still think unless the news tomorrow morning is bad, we won't reverse until next week and then it will only be a couple days worth before resuming the run. Due to the statistical odds, I will probably lean toward trading puts instead of calls for my intra day scalps but my main point was that this thread sounded like this is going to be a failed rally in the short term and I am in the camp that it could last a few weeks. Again, I firmly believe that the fundamentals are not here to justify a rally due to US Dollar weakness, China devaluation concerns, China vs Taiwan deadline approaching, multiple South American problems and this rally being headed by some of the most lousy stocks as far as hype that always proves to be wrong (Semi-conductors), Banks being weak etc. On the other hand as I said, technically, this rally has legs. Leadership is changing whenever news tries to knock a sector down, Bond is up driving the TYX down to my new target of around 5.7% with 5.5% highly possible before I expect a reversal backup, My sell signal on oil stocks are starting to move my way thus hinting at lowering inflation concerns, and strength of the break outs when they occur on the techs. The OEX top 100 is also staying ahead or at par with the rally which shows there is strong leadership so far. I agree with others here that breadth still is not as wide spread as I would like to see in a true frenzy. Last Ocober it didn't matter what the stock was or how dismal the outlook was, it rallied anyway until the rally started running out of free money and then buyers got picky. This rally seems to have the buyers being fairly picky right off the bat which says they don't have as much cash as the last few manias. Still I think they have enough to make this last a while. I will make up my mind over the weekend when I have more time, a full week of weekly data to base decisions on etc but I will probably be leaning neutral as to if I will trad emostly calls or puts on Monday since Mondays are normally up days, toward puts on Tuesday and Wednesday then will let the charts point toward Thurday's strategy and calls on Friday for J6P day. <ggg> These will almost all be day trading only though. PS - to those that know the story, they are finally going to fix my knee the 7th. Yippee, only 1 and a half years late but in the eroding Clinton benefit era military, getting it fixed at all is a miracle. Good Luck, Lee