Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: John Madarasz who wrote (28219)	10/2/1999 3:55:00 PM
From: Benkea	Read Replies (4) \| Respond to of 99985

Shepler Capital Management: Weekly Outlook for 10/4 - 10/8/99 OCTOBER RALLY? In last week's commentary we stated: "...it appears that the 9/27 +/- 3 trading day turning point has indeed inverted and will become a low rather than a high... the chances for a mini-crash low are highest in the Monday-Tuesday timeframe. So, although the early going next week could be quite frightening for bulls, a potentially important low should only be 1-3 days away... the Dow 10,000 area should provide strong support, but a panic spike below that level may be necessary to clean out all the sellers, and set the stage for the next upleg." And in a Tuesday intraweek update we stated: "Based on our cycle work as noted in the weekly commentary we expected a potentially important low in the 9/27 +/- 3 trading days timeframe. We are presently in the heart of this timeframe and thus today's intraday low of 1259.29 SPX is very likely the intermediate-term low we were expecting. Positive Seasonality due to end-of-month 401k inflows begins Wednesday, which makes the case for a 'Turnaround Tuesday' even more compelling. Also our intraday momentum charts have just given a strong buy signal within the last hour. As a result we are covering short positions and moving back to the long side as of today's close." While Wednesday and Friday's intraday downdrafts gave us a few nervous moments, when all was said and done Tuesday's low of 1259.29 SPX has so far held, per our mid-week alert. Certainly this is no time to be a complacent bull, but we do feel that the conditions are ripe for a very strong snapback rally in the month of October, with the possibility for new highs by November a very real one in our estimation. One potentially bullish omen was this Thursday's stock market performance, which was characterized by strongly positive breadth readings. Weak Thursday's tend to be the hallmark of a bear or corrective trend, and sure enough ever since the July top every Thursday has been characterized by weak tape action, until now. This last Thursday was the first Thursday since 7/15/99 to show a positive close for the NYSE Advance/Decline line. How meaningful this turns out to be is sheer speculation at this point, but coupled with our cycle work, and the extreme bearishness pervading the market psychology, we think the chances are very high that a multi-week rally got started at Tuesday's intraday low. Next week could see some further re-test of this week's low prior to the Fed meeting, but a post-Fed relief rally should follow the Tuesday 10/5 FOMC meeting, assuming of course that Greenspan doesn't do something insane like hiking rates again. Our initial upside target for this rally is 1330 SPX. A rally above that level should then target 1380-1400 SPX. The 1259.29 SPX low is now critical support for the bullish case, and we will place our stop for all long positions at this level. The next major turning point date we show is 10/19 +/- 3 trading days. We cannot be sure at this time whether that will mark a high or a low, but we will be watching the market action closely going into that timeframe. After that our next major turning point is 11/3 +/- 3 trading days, which we believe will be an important high. urbansurvival.com