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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: Stcgg who wrote (44155)	9/8/1999 2:33:00 AM
From: Stcgg	Respond to of 122087

Excerpt from the Eliott Wave.. Sep 7, 1999.. Our forecast from last Friday's Update was for a market top today that leads to another leg down below the August 10 lows. The blue-chip indices topped just after the first hour of today's session and fell for the remainder of the day. My top wave count is that the [Dow Industrials] and S&P indexes traced out a small-degree ending diagonal triangle fifth wave into today's early morning high (see chart). For those of you following our count, this morning's high completes Minuette wave (c) of Minute wave ((ii)) of Minor wave 3 or C down. If correct, the averages should be in the early stages of a relentless sell-off over the next several weeks. The message right now is not so much with technicals (breadth resumed its weak ways; the NYSE a/d ratio closed at .81:1), as it is with the construct of the Elliott wave pattern. The near-term pattern is bearish and below we have identified some levels to help guide us. The decline from this morning's high has traced out three-waves so far, the early development of a larger decline. But this pattern also means we cannot yet eliminate the alternate count. This alternate labels today's high as just Minuette wave (iii) within a five wave rally from last Thursday's low; this afternoon's decline traced out Minuette wave (iv). The alternate count implies another push up, possibly lasting into Thursday, before Minute wave ((ii)) tops and the next leg down begins. Luckily, the pattern has developed to allow us to identify a key resistance level that will guide us. That near-term resistance is 11096 in the Dow, 1361.60 in the S&P futures, 1359 in the S&P cash, 716 in the OEX, 111 01/32 in the Dow Diamonds and 136 3/8 in the S&P Spiders. As long as prices remain below these resistance levels, our top wave count remains in effect. I expect the market to continue to fall now. If prices push above these levels then the alternate count kicks in, which means Minuette wave (v) up is underway. Under this alternate, higher resistance in the Dow is 11169-11231, in the S&P futures it is 1369.75-1375.05, in the S&P cash it is 1366.05-1370.15, in the OEX it is 722.70, in the Dow Diamonds it is 111 28/32-112 13/32 and in the S&P Spiders it is 137-137 22/32. Bottom Line: we are near-term bearish the blue-chip averages against our above cited resistance levels. If correct, a sharp decline lies before us that will carry the indices below their August 10 lows. If prices break out above resistance we will turn temporarily neutral, until we can re-institute our bearish stance at the higher resistance targets we cited. Tonight in the [September NASDAQ 100] and other OTC indices, I have published a chart outlining my near-term wave count for the NASDAQ Composite. In it you'll see a five wave rally from the August 10 low (2442) to this morning's high. Admittedly, this is not "textbook" rally. Yet if the blue-chip averages are in the early stages of a steep decline, the OTC indices should be too. This wave count allows for this outcome. Better still, it identifies a risk level for a bearish stance that is very near by -- today's highs. They are 2532 in the futures, 2535.03 in the 100 cash, 126 5/32 in the QQQ's and 2860 in the Composite. Thus, we are adopting a bearish stance against these highs. If they are exceeding, our near-term count is wrong and the averages should extend higher. As of tonight, I do not have a confident higher resistance level. [December Bonds] have either peaked in wave (e) of a fourth wave contracting triangle at Friday's high of 114-16, or they will do so after one more push up toward resistance of 115-02 to 115-20. Because the next highest probable move is a sharp thrust to a new low beneath 113-00 (above 6.23% in cash yields), it makes sense to prepare now for this eventual outcome. Near term we are bearish against Friday's 114-16 high. As long as it holds, the thrust to a new low should develop now. Downside support remains 111-05, then 110-09. If bonds manage to poke above Friday's high, we will remain bearish against a close above 115-20. Closing above this resistance challenges our bearish outlook. We will address an alternate scenario if market action warrants. The [U.S. Dollar Index] pushed above our cited resistance of 100.06-100.29 for about two hours in overnight trading last night. The overnight high of 100.49 was a perfect Fibonacci 62% retracement of the five-wave fall from 101.46-to-99.31. By this morning the index had fallen back into our resistance area, which remains formidable against a further rally. Continue to treat a break down beneath 99.39 as an indication that the next leg down is underway. The next stop still should be lower support of 97.72-98.16. If the index decides to rally again near term, resistance is today's 100.49 high; it should not be violated. Any break above it will project prices immediately toward the next resistance of 100.88-100.91. Steven Hochberg, Editor