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

To: Challo Jeregy who wrote (24179)	8/30/1999 7:44:00 PM
From: Matthew L. Jones	Read Replies (3) \| Respond to of 99985

Current intermediate downtrend is 3 days old and has retracted 4.06% on the $NDX based on the Thursday morning high of 2467. That trend was 13 trading days and 16% in terms of duration and extent. Support for the Nasdaq 100 index is around 2160. Statistically, we can count on the following: 1) Average duration of downtrends on the $NDX is 7 days. The odds of trend continuation based on duration probabilities alone is odds of 2.61:1 favoring continuation. 2) Extent of downtrends on the $NDX is 7% or 2/3 retracement of the most recent intermediate uptrend which in this case would be 10.7%. Statistically, there is a good probability of a continuation of the current downtrend based on extent criterian alone. The odds favoring trend continuation are currently at 4.0:1. 3) The risk reward ratio of trading in the direction of the intermediate trend is as follows: Near term resistance is at 2511 and near term support is at 2160. Therefore the near term upside potential is 144 points versus a downside potential of 201. That puts the probabilities in favor of playing the down move about 1.4:1. In summary I would characterize the current trend as just under halfway extended. I would (as of tonight) place a short term bottom of between 2100 and 2200 probably closer to 2100. This should occur statistically either Friday or Tuesday (markets closed on Monday next week). I would bet on Tuesday, with Friday being the final selling blow off. That would be followed by an intermediate uptrend of 11 to 13 trading days placing the next intermediate top at somewhere between Wednesday the 22nd and Friday the 24th. This top would begin the last leg (3rd) of this market correction which will end between October 5 and October 8. After that, I predict clear sailing and a resumption of the bull market through the end of January. If this does occur (as stated above) it will mirror very closely the chart from last year. Incidently, historical probabilities say that the five months (Sep, Oct, Nov, Dec, Jan) typically amount to 2/3 of the annual gains in the $NDX. The other seven months comprise the other 1/3. Statistically, we should see a 20% rise in the index through January. Obviously nobody can accurately predict precise market moves, however, this is my best nearterm forecast based on my study of the history of the Nasdaq 100 index. Time will tell. Any comments (whether agreeing or dissenting) are welcome, as this is a learning experience for all of us. Matt