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

To: Teresa Lo who wrote (24698)	9/3/1999 3:57:00 AM
From: Teresa Lo	Read Replies (1) \| Respond to of 99985

On a Wing and a Prayer - Morning Market SnapShot for Friday, September 03, 1999 Recently, in the more esoteric technical analysis circles, there have been many debates amongst cycles and astrological analysts on where the market is heading because it seems to be in a position very similar to past market panics. We read these items with academic interest but do not rely on the premise that history repeats itself. While history does not repeat itself in terms of economic fundamentals, social climate, technological advances, and the like, charts by nature are very narrow in scope because they essentially plot two things ? price and volume. The same patterns show up time after time on charts and the chartist uses this information to assess the market in terms of price and volume as a function of the battle of the buyers and sellers. If we look at the charts of the S&P futures contract for 1987 and 1999, we can see startling similarities. In July 1987 and August 1999, the all-time high at the top was a classic bull trap, where the market made a minor high on a fake breakout before breaking down. In both years, there was a feeble rally attempt that moved above a previous swing high and the 20-day EMA and the 50-day MA, making it look like a move back to the high was coming again, but failing on classic Japanese candlestick patterns. In 1987 it was the evening star. In 1999, it was the Three Inside Down. In both years, the new NYSE 52-week highs were lacking on the failed rally. In both years, the 10-day moving average of the net high/low differential turned down after the failed rally. We could go on and on about how the weekly charts have striking similarities to other panics but we won?t. We simply went to 100% cash this past Monday as outlined in our August 30 Morning Market SnapShot. The important point is that people behave the same over and over. Going into today?s Non-farm payroll numbers, better known as the Employment Number, with traders and investors primed by the kind of spotlight that the financial media is putting on this economic statistic, the catalyst to move the market to heaven or hell is about to be unleashed. The December Treasury bond is within striking range of the recent low. Toss in the market?s internal weakness, the U.S. Dollar under pressure against the Yen, rising interest rates, rising commodity prices, and earnings warnings, the Employment number is bringing everything to a head right here. The market has come close to the edge many times before in this grand bull market, but it has never been against a backdrop of so many negative factors. Perhaps a moment of silence is in order at 8:30AM Eastern before the games begin. Charts specific to these comments have been posted to intelligentspeculator.com