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

To: LaVerne E. Olney who wrote (31693)	10/28/1999 12:57:00 PM
From: Stephen	Read Replies (2) \| Respond to of 99985

LaVerne, I believe the relevance of the a/d as an indicator should be looked at in terms of the overall market rather than the indexes (which is a loaded game anyway). In any event and as we all know, its relevance as a leading indicator is questionable. As I mentioned yesterday, looks like the boys knew todays ECI figure - hence the program buying/leap in finacials. Noticed Tom Costello mentioned that someone called him and mentioned that the market had turned 5 times this year in the last hour, correctly reflecting the next days economic data. I haven't noticed the type of heavy program buying which occurred yesterday 5 times this year ... but certainly twice before. Interestingly, they both sold off into the early morning strength ... though the market continued to go up after the retracement anyway. Didn't really see any great pullback today ... but wasn't able to watch that closely. If anyone has an insight to that I would appreciate it. I doubt Ole Greenie has been corrupted ... and therefore cannot see anyone knowing what he might say tonight (except his wife) .. so the anticipated weakening at end of day must have a chance. Stephen

To: LaVerne E. Olney who wrote (31693)	10/28/1999 8:15:00 PM
From: James F. Hopkins	Read Replies (1) \| Respond to of 99985

Here is a titbit on the A/D line, particulary long term one. Perma Bears over do a bad A/D line, ( and I bought into that early on ), and had to do some thinking about it. To start with A long term A/D line can not keep up with the indexes ever* maybe short term but not long term* Mostly because a lot of good small companies keep getting bought out and they no longer show up in the Advance line. If we could keep track of the mergers and add that number to the long term advance line it wouldn't look as bad as it does. When a company merges or gets bought you like have 2 companies going up by proxy but the market is only seeing one. The same can be said for the decliners but not as many of them are bought or merged. Heavens look at how many companies MSFT has bought over the years, and no one can argue that her long term trend is not up, GE is another one that buys up companies left and right..in fact half the major big caps that have good long term uptrends have made many many aqusitions, add all them to the A side of the long term A/D line and it would print much higher and not give near as bad a picture as the perma Bears are convinced it does..and would have us to believe. ( they have not put their brain in gear, the A/D line is not worth a crap for any thing but short term TA, it's chained and doomed to drag behind the advance line over time in any kind of bull market. AS the economy does better then more companies come on line and more get bought , leaving the dogs making up the decline line..and 2/3rds of the good ones not getting counted any more after they have joined forces with a bigger company. Who can keep up with all the mergers & it would take keeping taps on them to create an honest A/D line. --------------------- Short term OK , longer term forget it and don't let a perma bear tell you how bad it is historicly..as the way it is and was recorded has a big short coming.. ---------------------- Other than the A/D line lets keep in mind at market bottoms New Lows set records and max out, at market tops the new Highs set record numbers and max out, it's a relative thingy, and not all together reliable here again a lot of mergers can deplete the companies that would be going on to make new highs..when they are bought at a premium it slows up the buyers stock at least for a while , and you just get that one new high one time,,,then it's gone. I get more worried about a market when the new highs start setting records than I do when new lows set records. ---------------- So much for the A/D line. Jim