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

To: James F. Hopkins who wrote (31766)	10/28/1999 9:13:00 PM
From: Benkea	Read Replies (1) \| Respond to of 99985

Jim: There wasn't that much difference in the Yen today.

To: James F. Hopkins who wrote (31766)	10/28/1999 9:45:00 PM
From: P.Prazeres	Respond to of 99985

And speaking of bear markets ? Are we getting close to the end??? A month ago, I reviewed the current collapse in the NYSE Cumulative A/D Line. Back then this indicator was at 32,682 and there was mention that if this 18-month decline might be coming to an end, especially if it finds resistance in the 25,000 to 30,000 area. On Friday, this indicator closed at 27,416 after dropping to a 3-1/2 year low of 26,463 on Thursday, October 21, 1999. [See the StockMotions website for a look at what a collapsing market looks like ? that is, the current chart of the NYSE Cumulative A/D Line stockmotions.com ]. Once again, we are in that time of year when previous bear markets or corrections in this indicator have ended. It is also getting very close to the July 24, 1996 correction low of 25,248. If this point is violated in a significant fashion, the next level of support is around zero. I am tending to lean towards the possibility of a significant turn occurring in this indicator. Over the past few weeks, many of the beaten down stocks have shown signs of bottoming characteristics - selling off on heavy volume with rebounds to follow and with the absence of revisiting the lows quickly (i.e., finally putting in higher lows). Friday, October 22nd marked the 72nd consecutive day that the number of new lows on the NYSE has been greater than 40. Again, ignoring the five market days that had greater than 30 but less than 40 new lows since June 2nd would make last Friday the 104th market day that this indicator has flashed ?RED?. Once again, as a comparison, last year this indicator flashed ?RED? for 108 consecutive market days, from May 15, 1998 to October 16, 1998. Another indicator that has been extremely good at looking ahead is the OEX Put/Call Ratio indicator. In analyzing data since February, 1984, anytime it closed above 2.00, the Dow, over the following twelve months is in positive territory with respect to the closing value on the day the indicator flashed ?BUY?. On Friday, October 8th, the OEX Put/Call ratio closed at 2.07. During the week that followed, it also had daily closing readings of 1.90, 1.74, 1.69 and 1.64?all relatively high readings. The following is an excerpt of a statistical analysis report available on the StockMotions website regarding this indicator [it can be downloaded for free using the ?Indicator Reports? link] stockmotions.com : ?The scatter plot shows that as the ratio increases from 1.50 toward 2.00, the future one-year drop in the market diminishes. In other words, the more extreme the bearishness of the indicator the better the performance of the market in the immediate long term. There have been only 73 days in which the OEX put/call ratio exceeded 2.00 in the period from February 22, 1984 through May 5, 1998. Through a quick analysis of the above statistics, it is clearly evident that an OEX Put/Call Ratio of 2.00 or greater on a daily basis is an excellent indicator of predicting a market that will not be down after 250 days, relative to that day?s close. Also the market on average will have an above average return over the next twelve months.? Note that there was a cluster of high reading this April when the Dow was right around where it is today?.so if this indicator stays true to its significance, the Dow should at least be in its current area and not lower by April 2000?.just something to keep an eye on. Paulo stockmotions.com