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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (24689)	1/4/2000 1:56:00 AM
From: Johnny Canuck	Respond to of 67738

EPC = 0.336 10 SMA = 0.37 Market is currently overbought.

To: Johnny Canuck who wrote (24689)	1/4/2000 2:03:00 AM
From: Johnny Canuck	Respond to of 67738

Possible short for the quick and the brave: ********************* ********************* To: IntelligentSpeculator.com (6042 ) From: IntelligentSpeculator.com Monday, Jan 3 2000 2:18AM ET Reply # of 6280 The Trader's Notes for Monday, January 03, 2000 We begin the New Year with a quick look at market internals. 1999 went out on a high note, with market participants in a state of euphoria over technology stocks. As we discussed in mid-December, the 10-day moving average of the net differential of NYSE 52-week new highs/new lows was about to turn up, indicating that rotation inside the averages had likely "worn off" the overbought conditions, which provided fuel for a move to the upside. We note that the VIX is now at the high end of the Bollinger Band and that the 5-day RSI of the same is now in overbought territory. The market is stretched, particularly, in the tech sector. While commentators remain "cautious" for the records, their actions tell us something else. All eyes have been focused on the trading in shares of Qualcomm, since the analyst prediction of $250 (post-split) per share made last week. If we look at the daily chart, the action of last Thursday and Friday set up a classic harami pattern, a pause at an extreme point. On Thursday, sellers took control, selling it down from a record high open on huge volume. With ADX near 60 on the daily chart and over 70 on the weekly chart, there is less than zero room for error for traders of this parabolic stock. The resolution should come shortly for QCOM. Each time we see parabolic moves to the upside or the downside, when all prevailing opinion is totally one-sided, we are reminded of the following periods in history when participants were so caught up that they missed the obvious. As traders analyzing supply and demand, we must stay true to market action by observing it's two main components: price and volume. They never tell lies. A trader trades on what is, rather than how he wishes it to be. In the special case of parabolic moves to the upside, it is often luck that gets a trader long, and in the ensuing feeding frenzy, he gets caught up in the action, and becomes careless. Often, he buys more, too much more, and on a pull back, gets wiped out. Short sellers are often those who believe that it's gone "too high", but in a parabolic move, no high is too high, for it only breaks when the last of the buyers have bought, and not a minute before that. There is no timing the perfect short in moves like this, unless one has a pipeline to the Almighty. As that line in the movie Hotel New Hampshire goes, "The end came, and it came quickly?" Please do not construe today's comments as "bearish", for traders are neither bulls nor bears; they just make money. 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 are located at intelligentspeculator.com.