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

To: Kevin Batey who wrote (24889)	9/4/1999 8:16:00 AM
From: Benkea	Read Replies (1) \| Respond to of 99985

Better than Favors :)) "Shepler Capital Management: Weekly Outlook for 9/7 - 9/10/99 BEAR BURGERS In our 8/23/99 commentary we stated: "After a 9% rally off of the August 10th low, the SPX appears to have put in at least a short-term top at the high of 8/25. From here our cycles call for a short-term low on 9/2 +/- 2 trading days, so the current pullback could last well into next week before the market resumes any rally... we would be very careful about buying into any September crash scenarios, as our cycle analysis argues strongly against any such occurrence. One bearish outcome that appears more likely is that the current rally will take the form of a contracting triangle "B" wave, with the market whipsawing in a trading range created by 8/10 low and the 8/25 high. This type of "B" wave would catch both the "blow-off" bulls and the "crash" bears in a "meat grinder" market, full of false starts in both directions." As we write this week's column (at mid-day Friday) the bears crash hopes appear to have again gone up in flames (no big surprise there!), as the market appears to be headed for a re-test of the 8/25 high at a minimum, and quite possibly a trip to new highs. All of this week's fretting over the jobs report turned out to be just another bear trap, and it appears that the "meat grinder" market may be churning out bear burgers as the special of the month. Last week week we told you that our cycle work called for a low in the 9/2 +/- 2 trading day timeframe. [Bill's call was phenomenal on this. - Ed.] The SPX made it's intraday low this week on 9/2, and thanks to a bullish jobs report has risen nearly 4% off that low as of mid-day Friday. Our cycle work now points up strongly into 9/27 +/- 3 trading days, with a minor cycle high due 9/14 +/- 2 trading days. Last week we targeted a -50 reading on the McClellan Oscillator, and T-Bonds above 6% as important thresholds for the bullish case. The McClellan flirted with a breakdown below the -50 level all week, with borderline readings of -53 and -53 on Monday and Tuesday, and then a fakeout breakdown to -63 on Thursday. At time of writing, breadth has bounced back impressively on Friday, with advancers leading decliners by a whopping 4 to 1 margin (a bullish breadth thrust), and thus the McClellan should also bounce powerfully to the upside at Friday's close, negating Thursday's fakeout move. The T-Bond has also rallied back impressively Friday, with the yield dropping back towards the psychologically important 6.0% level. If the yield can close this week back below 6.0% (at 6.02% at time of writing), that would bolster the bullish scenario greatly. So, with the bears September crash scenario out the window (as we suggested it would be in last week's column), what should we expect the rest of this month? Despite last weeks shakeout attempts, the bullish scenario still has several factors in it's favor. For one, our cycle work suggests that the market should rally into 9/27 +/- 3 trading days. Also, the post labor day period should see volume begin to pick up as the big players return from the summer vacation period, which should favor bulls. Seasonality will also be favorable during the 9/11-9/20 time period according to the "buy on Rosh Hashanah, sell on Yom Kippur" rule, coupled with the positive expiration week bias. And then finally we get end-of-quarter "window dressing" into month-end, as the boyz pump stocks up to ensure their quarterly bonuses. Also, sentiment data show room for plenty of rally here, as bearishness extremes appear to have been reached, with TRIN-5 at the most oversold level of this year, and an extremely high CBOE total put/call ratio of .98 registered on Wednesday 9/1. Furthermore, "smart money" indicators are also bullish, with the latest COT report showing the commercials maintaining a large net long position in S&P futures. So, we are inclined to favor the long side of the market over the short side this month, as the most bearish outcome we would expect this month would be a sideways trading range, with the most bullish outcome being a blow-off rally to new highs. We concluded last week that it was not the time to be short or in puts, and today's massive short squeeze supports that conclusion. To be sure, the time will soon come when this extremely overvalued market will collapse under it's own weight. However, our analysis tells us that time is not yet here, and is not likely to arrive until 9/27 +/- 3 trading days at the earliest. In the meantime a re-test of the 8/25 high appears to be a shoe-in, with an upside breakout to new highs looking more and more likely, especially given today's bullish "island reversal" pattern in the S&P futures." urbansurvival.com

To: Kevin Batey who wrote (24889)	9/4/1999 12:26:00 PM
From: James F. Hopkins	Read Replies (1) \| Respond to of 99985

Once I decided to play the XLF, I didn't take my eye off the ball, I get into it with three windows running one being my DVI , when I say I got in on the low of the day, I mean real close..actully I did get the exact low only one day, I get nervous when I get the exact low, as I've had them taken back even after a conformation. I stayed within 1/8 of the low, and Friday got within 1/32 .. One thing that helps is watching my broad DVI in a third window as all the indexes do seem to track sort of close. Also note I stepped into it as while my signals were good even Tuesday they were not strong. By Wed I had a 23-1/4 average cost..I doubled Thursday and got it down to 23-1/8th average. By then I was swinging with all I had in cash , and about ready to leverage and tried right at the close but was to slow. ----------- While I could see the bounce coming I could not and did not expect it to be that fast & hard. a 5% bounce in the XLF is most unusual so I didn't know what to make of that, and took my chips off the table, had it been less of a bounce I'd most likely let it run or even added to my bet. But 5.08% on the XLF in a day, hmmm that's so rare it blew my mind. Jim