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

To: Benkea who wrote (28220)	10/2/1999 4:26:00 PM
From: Stcgg	Respond to of 99985

Elliot Wave Update - Expect Dow 9775-9875.. Update for Friday, October 1, 1999; 1:35 PM, EST. PLEASE NOTE: THIS UPDATE IS BEING PUBLISHED AT 1:35 PM, EST. ALL CHARTS REFLECT DATA APPROXIMATE TO THIS TIME, AS DOES THE GRID ABOVE. The broad indices rallied yesterday, in line with our short-term forecast. The rally was part of Minute wave four and held just beneath our cited resistance of 10465-10612 in the Dow. Wave four either ended at yesterday's intraday high (10403), or will do so early next week. Thus we continue to think that upside potential is limited from here and the next significant move will be a fifth wave lower in all of the blue-chip averages (see Dow chart). The fifth wave down in the [Dow Industrials] will satisfy a number of Fibonacci relationships between waves in the 9775-9875 area. More bearish potential does exist if this support is violated. My view for the [December S&P 500] has not changed: it remains on track to fall into the 1229.60-1245.20 area at a minimum. 10-day TRIN is still not at oversold levels that have characterized recent bottoms (see chart). It is likely that the fifth wave down should do it. And sentiment remains less than "panicky." The 10-day CBOE put/call ratio is at .63. At the September 2 low (10733) the ratio was at .67. So more people were buying more puts (i.e. more fearful), when the market was roughly 500 points higher. This too suggests that there will be further selling pressure before a bottom is seen (supporting our fifth wave view). Looking ahead just a bit, once five waves are complete from the recent all-time highs (possibly sometime next week), we should expect to see the market trace out the largest reaction since this five wave sequence began. Since the largest reaction to date is the 409 point rally from September 2 to September 10 in the Dow (Minute wave two), the market should experience a bigger rally than this one. So to sum up: we remain bearish the blue-chip averages going into next week, looking for a fifth wave down to complete Minor wave 1 of a new bear market. The alternate remains that a fifth wave down will complete Minor wave 4 in a still on-going bull market. Near-term it matters little since both wave counts call for the same thing -- a fifth wave. It's the same pattern in the [December NASDAQ 100] and other OTC indices, as in the blue-chip averages. Wave four looks like it traced out a contracting triangle and will give way to a fifth wave thrust lower. Downside targets remain unchanged: 2350 or lower in the futures, 2325 or lower in the 100 cash index and below 116 in the QQQ's. [December Bonds] are fast approaching the end of the diagonal triangle pattern we've discussed in the Update. All that is necessary to satisfy the minimum substructure for its completion is a break beneath 112-16 (Sept. 14 low). As before, I suspect the ultimate low will be somewhere between 111-20 and 112-16 (somewhere near 6.277% in cash yields). It must be above 111-20 otherwise the third wave of the ending diagonal is the shortest, which means we counted the internals wrong. That low should lead to a multi-month rally toward the area near 120-00. So a good buying opportunity is very close, but it appears the market is not quite there yet. Any rally that carries above 115-16 now means the fifth wave is over and a solid low is already in place. The [U.S. Dollar Index] achieved our long-standing downside target of 97.72-98.16, by falling to 97.77 intraday thus far. The subdivisions of the pattern do not yet look complete, so continue to look for further selling pressure in this market. The index should fall into the 97.00-97.74 area, and there is a strong probability it will test 96.04, the 62% retracement of Intermediate wave (1). A close above 99.00 would be the first sign that the entire wave (2) correction from the 104.88 high (July 12) is over. The [XAU] still looks like it needs another push above Tuesday's 92.72 high to complete a five-wave rally from 62.70 (Sept. 17 low). This five-wave push up will be Minor wave C of Intermediate wave (B). There is a new minor upside target at 93.75 (where wave five is 62% of the net distance traveled in waves one through three), but that target appears to close. A higher and more probable target is either 96.10-98.90, or 100.47-102.13 (if the first area is exceeded). So the near-term picture remains bullish and only a fall below 71.05 (a previous first wave high) would negate the pattern and turn the trend bearish again. In [December Gold], continue to look for higher prices from here, within the context of a developing Primary wave ((B)) from the $253.80 low (Aug.25). The next resistance is $334.60-$338.00, then $343.20 if the first area is exceeded. For practical purposes, volatility is extremely high at the moment (as it is in the entire precious metals complex), so participating in these moves is riskier (and potentially more rewarding) than usual. But as long as gold holds above $266.40 (a previous first wave high), the near-term picture is bullish. [December Silver] remains short-term bullish. A small-degree fourth wave either ended at today's low (5.520 as I am writing this), or will do so early next week. The next significant move should still be a rally toward 6.020, at a minimum. If this level is exceeded, a higher Fibonacci cluster is 6.235-6.344. One of these two levels and areas should mark the end of wave (C), and hence the top of Primary wave ((B)). Thereafter, a resumption of silver's bear market should resume. Key support for our bullish view is 5.330 (a previous first wave high). A break there returns the picture to bearish. Steven Hochberg, Editor

To: Benkea who wrote (28220)	10/2/1999 7:20:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 99985

A concept for discussion from the updated Chicken Page members.bellatlantic.net An additional issue which was not voiced often if at all are the disappearance of the Y2K factor. As most corporation have already updated their Information/Computer Systems over the last 3 to 5 years to be Y2K compliant, an substantial amount of high paid workers will be laid off and will need to search for new employment. This factor by itself can drain substantial amount of cash from the current income pool of consumers which will dampen the economy further. Most of this compensation was circulated within the US economy, so all in all corporate profits will not rise as sales will suffer. Further the softening in IS equipment purchases by US corporation will hit the tech sector and it's profitability. In a nutshell not a to rosy picture. Would appreciate to receive comments on this subject. Haim

To: Benkea who wrote (28220)	10/3/1999 8:59:00 AM
From: dennis michael patterson	Read Replies (1) \| Respond to of 99985

So what do you think of Shepler this week? I am quite encouraged that John Murphy is bearish. He is usually late in his calls, so we may be nearing a bottom. Shepler has been good of late.

To: Benkea who wrote (28220)	10/3/1999 9:44:00 AM
From: John Madarasz	Respond to of 99985

October Is Not the Cruelest Month By Mark Riepe, CFA, Vice President and Manager of the Schwab Center for Investment Research. What's the worst month for stocks? A lot of investors — myself included — would guess October. After all, October has seen two infamous market crashes, in 1929 and 1987, as well as substantial drops in 1989 and 1990. October's ghosts and goblins may get the most media attention, but statistics show that October is not the cruelest month for investors — that would be September. Based on historical information dating back to 1926, September has averaged total returns of -0.6 percent, with double-digit losses in 1930, 1931, 1937 and 1974. October (admittedly, the second-worst performing month) at least delivered positive returns over the same 73-year period, with average gains of 0.3 percent. Average total monthly returns of the S&P 500® from 1926 to 1998 Jan 1.7% Feb 0.7% Mar 0.4% Apr 1.4% May 0.6% Jun 1.3% Jul 2.1% Aug 1.6% Sep -0.6% Oct 0.3% Nov 1.5% Dec 1.7% Source: Schwab Center for Investment Research In recent years, October has fared much better. During the 1990s, October ranks as the eighth best month with an average return of 1.4 percent — better than March (0.6 percent), April (1.2 percent), June (0.3 percent) and August (-2.1 percent) combined. Seasonal skeptic I tend to be skeptical when it comes to trading based solely on the calendar (see my column Summer Rallies: Fact or Folklore?). Other than the January Effect, in which stocks, particularly those of smaller companies, tend to do well, seasonal effects seem to be more random than rational. Of course, that hasn't stopped people from creating theories to support seasonal investing. *Most revolve around the notion that the past is destined to repeat itself. (my edit) As someone who deals with numbers on a daily basis, I know how easy it is to design strategies that do well based on historical information. Whether that success will continue in the future is far more difficult to predict — and even harder to take advantage of. schwabon.com * The contrarian stance, which seems to be gaining some acceptance, is that this could be a good month, regardless of the similarities to last year. As is often the case, the market seems do do exactly the opposite of what everyone expects. Regards, JM