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

To: HairBall who wrote (24089)	8/29/1999 10:38:00 PM
From: HairBall	Read Replies (1) \| Respond to of 99985

INTERSTATE 35 ROAD KILL TRADING SYSTEM UPDATE Sunday - August 29, 1999 If you would like to read this update and review the charts at the same time, go to: homestead.com TYX (30-Year US Bond Interest Rate Index) Since my last update on the MDA Web Site, the TYX pulled back into the rising wedge pattern as expected. My "end of day" data provider only provides the closing rate for the long-bond. Taking a look at the QCharts TYX "end of day" semi-log daily chart one can clearly see the move back into the formation and a retest of the lower trend line this past week. The daily stochastic on both charts is saying rates will oscillate up into the formation. However, the shorter-term intraday charts are signaling that the lower trend line may get a retest first. DOT (Internet Index) The Dot dropped a little lower than expected as the Index was taken below the June low. Most likely stops were run twice with an up head fake thrown in for good measure. Stochastic was signaling a bounce and we got one. The nuts found support at the descending trend line based by connecting the 4/20 & 6/15 lows and extending right, proved to be support. Funny how that works...<ggg> The daily stochastic is signaling a move down. Looking at the 60-Min Semi-Log Chart the descending resistance line is coming back into play as the DOT continues up a rising trading channel. The intraday stochastic implies that a little movement up before the "end of day" stochastic rules. That implies a little struggle in this area before the DOT heads back down. It looks like the DOT will be putting in its second lower top. This next down oscillation is important, it will confirm the current medium-term trend by where the next support is found. RUT (Russell 2000) This Index dropped out of its rising wedge on Friday. It appears to be putting in a lower high. As with the DOT the next low will be important to the medium-term trend confirmation. UTIL (Dow 15 Utilities Theoretical Data) The Dow 15 found support at its 200-day SMA. The bounce moved the Index up above the centerline of its trading envelope, the 50-day SMA, a horizontal SRL and a rising SRL, eventually finding resistance at the upper band of its trading envelope. The stochastic indicator is signaling a pullback from this upper band. Note the UTIL has yet to set a new high. TRAN (Dow 20 Transports Theoretical Data) The Transports have set lower lows and lower highs. The rally this week found the previous support at the June low resistance now. Expect the TRAN to retest the lows of last Feb and note it has yet to set new highs. INDU (Dow 30 Industrials Theoretical Data) This Index made multiple penetrations but failed to re-enter its multi-year rising trading channel base from the 1987 correction. (dark blue dotted line) After find support at the upper band of that channel and at the lower band of its trading envelope (white dotted line) the INDU rallied until it found resistance at the rising SRL which was previous support from the Oct 98 low, (gray line) now acting as resistance. In addition it found resistance at the rising resistance line base by connecting the highs of August 97 and May 98 and extending right. (dark green line) Isn't it interesting how neat this plays out with the theoretical data. Of course specialist can hit their respective marks anytime during the day for the theoretical data...<gg> This is also notable, but to a lessor degree when looking at the 60-Min Semi-log chart. The green line being the Aug 97 & May 98 rising resistance line and the gray line being the rising SRL based off the Oct 98 low. One should also note the INDU broke to the norm of its rising wedge pattern base off the low of 8/10. It filled the recent gap up and found support at a pre-established price action area. (horizontal gray line) Stochastic hints this should be good for a bounce. Note, the INDU is the only major Index I follow that set a new high before turning down. Of course it is the most watched and reported of all the Indices...<gg> COMPX (NASDAQ Composite Index) The COMPX also found support at the upper band of its multi-year trading channel. (dark blue dotted line) It then rallied in a rising wedge formation up through the centerline of its trading envelope (light green) and the 50-day SMA. (light yellow line) It then tested the centerline before continuing the rally above the upper band of its trading envelope (white dotted line) finding resistance a little below the previous support line off the Oct 98 lows. (gray line) End of day stochastic is signaling a pullback soon from this level. The rising wedge formation is illustrated on the 60-Min Semi-Log Chart via the dark blue lines. Note it found support at the lower ascending trend line. Couple this with the intraday stochastic and I expect a small bounce before the break to the norm. NYA (NYSE Composite) This Indice move down and penetrated the upper band of it multi-year rising trading channel. Closing in the channel only one day but trading in it three. The 200-day SMA play almost the same roll. However, both proved to ultimately be support. The NYA rallied in a rising wedge formation above the centerline of its trading envelope, its 50-day SMA and found just above the 50-day SMA at the upper band of its trading envelope. The 60-Min Semi-Log Chart reveals the role the rising wedge played in the rally bounding the upper peaks. As would be the norm, the wedge broke to the down side closing the previous gap up. The intraday stochastic is hinting that support is coming into to play, but eventually the "end of day" will rule and I expect this Indice to go lower. OMC (My Overall Market Composite Index) This is my primary Market Indicator. It is not revealing anything different than the COMPX and the NYA so I will not go into any detail. I will just off up the 60-Min Semi-Log Chart for your viewing pleasure as well. Additional Charts: For those that are interested I have uploaded a chart for the SPX and I have also uploaded a combination chart of my OMC Index, TYX, XAU and the DYX in both a weekly and monthly semi-log format. I think the monthly chart will reveal much about the relationship between the four. SRL = Support/Resistance Line OMC = My Overall Market Composite Index COMMENT: I just found out that I have to run to the hospital so I am going to have to cut the comment short tonight. I have given direction in the chart breakdown portion of this update. As posted earlier this week on the MDA thread I expect Wednesday to be at least a short-term top. The magnitude of this bottom will reveal if the downtrend is still in progress off the 7/19 top or if this the first top in a rally that began at the bottom on 8/10. End od day stochastic is signaling the Market will go down some more. Will the Market set a lower low is the big question. Use the support and resistance areas indicated on my charts for guidance. Converging support and resistance lines will force a decision from the Market soon. Either way for the "risk" takers there will be money to be made...<gg> Also note the INDU is the only major Index I follow that set a new high. In addition, I will add commentary to this update on the MDA thread later in the week. NOTE: In today?s Market, no one should be invested or trading without an exit plan for each investment or trade. Good trading all, I hope you find my efforts useful! Regards, LG Disclaimer: My updates are my opinions only and I reserve the right to be wrong on occasion. Do not base any investment decision solely on anyone's views or analysis. Do your own research and take responsibility for your investment decisions.