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

To: Teresa Lo who wrote (34626)	12/17/1999 9:25:00 AM
From: Teresa Lo	Read Replies (1) \| Respond to of 99985

The Trader's Notes for Friday, December 17, 1999 For two weeks, we have been watching the test of the summer highs of the S&P 500 and the Dow Industrials on the weekly chart. These two indices have not been able to move up while the NASDAQ 100 index, makes new highs nearly everyday. With NYSE 52-week new highs being swamped by new lows daily, this action is not surprising. Everyone knows that a handful of stocks are holding the indices up and this has been repeated often on television. The S&P has been going sideways on the daily chart near the old highs, not giving traders too many clues, but on thing traders know is that the longer the sideways movement, the bigger the break will be when it finally comes. So the question becomes this: Has there been enough rotation within the body of the market to move to the upside, or is this "it"? Next week will see the last FOMC meeting for the year. On Tuesday, the outcome of the meeting will likely provide the catalyst to move the market out of this range. At the moment, while scalpers are making hay on the NASDAQ, interest rates have been marching steadily upward. It is set to test the October high. The outcome of this test is going to be one of the most important tests all year, and therefore, we are watching it with great interest. Treasury Bonds fell further to the downside yesterday, out of the triangle pattern, toward the October low. As mentioned in previous columns, the Dow Utilities index, now trading at a low for all of 1999, forshadowed weakness in bonds and higher interest rates. The moment of truth is at last upon the market. Charts specific to these comments are located at intelligentspeculator.com 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!