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

To: Teresa Lo who wrote (31560)	10/29/1999 3:34:00 AM
From: Teresa Lo	Read Replies (1) \| Respond to of 99985

THE TRADER'S NOTES for Friday, October 29, 1999 Yesterday's Observations: Employment Cost Index came out .1% better than feared and the market exhales in a rush of buying as the "New Era" is hailed by television commentators. AMZN was downgraded by the analyst that "made it". Bond market moves up to resistance. Funny how the panic over bonds on Monday set up a reversal as noted in Tuesday's Traders Notes. The intriguing head and shoulders reversal noted on the intraday S&P chart has been realized and the measured target of the pattern has been reached. Break of the downtrend line seen on the daily chart of the S&P 500 Index will be considered by many as the beginning of a new uptrend. The SPX is now at resistance in the 1340 area. The 10-day MA of Net Differential of NYSE New Highs/New Lows finally improves and turns up with 77 new 52-week highs vs. 147 new 52-week lows. The Dow Jones Industrial average has also broken the downtrend line on the daily chart. The NASDAQ 100 Index is set to test the all-time high. The CBOE Internet Index is the only index having trouble moving up at this point. Today's Theme: Let's see how far this move up can take the market. The market is not out of the woods yet, and we'll take it one step at a time. Once viewed as a head and shoulders top, there now exists the possibility of a descending wedge pattern as the neckline failed to break decisively at the October lows. At this point, the market is still vulnerable to a false move up out of the pattern, trapping breakout players. The Trader's Notes prepares the trader for the day ahead, providing observations on market sentiment, internals, support/resistance levels and key pivot points in the major market indices using the daily chart. Use of moving averages and the Average Directional Index (ADX) indicator helps to determine whether the market is trending up/down or chopping sideways. Using Japanese candlestick charting techniques, observation of market action around support and resistance assists in the analysis of supply and demand based on fundamental principles of classical technical analysis. The results set up "if-then" scenarios used by the trader during market hours. Technical analysis is not used as a tool to "predict" the future or to pick tops and bottoms. It is used to detect areas of trend change and emerging trends. In a trading range, traders generally look to buy at the low end of the range and to sell at the high end of the range ? or stay out all together. In a trending market, traders generally look to enter the market on every retracement until it enters a trading range and ends on a test. The goal is to buy every dip in an uptrend and sell every rally in a downtrend. The trend is your friend until the end when it bends! Charts specific to these comments have been posted to intelligentspeculator.com