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

To: James Strauss who wrote (41560)	2/27/2000 2:03:00 PM
From: papa bear	Read Replies (1) \| Respond to of 99985

Hi Jim, Agree. Another way I use to say the same thing, i.e., I believe we will see a rally sometime soon (whatever that means) is through linear regression. On DJ-30, I use a 5-year linear regression, and corresponding channel. The DOW touched the bottom of this channel (and then rallied) in: 7/96, 4/97, and 9/99. Of particular note was the unforgettable 8/98 to 10/98 correction. At this point, the Dow ended up about 13% BELOW the bottom of the channel, but rallied strongly thereafter. At its present closing price, the Dow is 5% below the bottom of the channel, if my arithmetic is right. The formation though indicates a short-term oversold and a possible valley forming. JMH (and amateur) opinion, of course. papa bear

To: James Strauss who wrote (41560)	2/27/2000 3:28:00 PM
From: Michael Watkins	Read Replies (2) \| Respond to of 99985

James, I use trendlines and exponential moving averages... For this analysis I looked at the last three corrections in the Dow, S&P-500, and the NYSE for 1997, 1998, and 1999, using a 200 day moving average on the weekly chart... In each instance, the correction ended between 18% to 25% above the 200 day moving average on the weekly chart... Because it's a weekly chart we are really looking at a 200 week moving average... That's four year's worth of average... It has all the peaks and valleys in it... It tends to give a more reliable and smoother picture than the shorter term charts when analyzing market turns... With the exception of the S&P-500, it looks like we are getting ready to resume the uptrend in all indices soon... I'm not disputing anything you say but would like to point out that your analysis only takes into account the last few years. There have been plenty of corrections that moved right to, or below the 200 Week moving average. My data for the INDU goes back to th 20's - scanning through this I can hardly find a period in time except the recent bull market where it has not touched the 200 week EMA. Also, and just playing around with this mind you, there has not been a single other occurance of the following happening (weekly bars) in the entire 1990's: (High < High[1] and Low < Low[1]) AND (High[1] < High[2] and Low[1] < Low[2]) AND (High[2] < High[3] and Low[2] < Low[3]) AND (High[3] < High[4] and Low[3] < Low[4]) AND (High[4] < High[5] and Low[4] < Low[5]) Basically an unprecedented string of down weeks (regardless of closing price being up in the week, lower highs, lower lows) for the past 10 years. Doing some more look seeing here... there appears to be a correlation to what happens next if this happens above the 200 week EMA. Basically regardless of rally, the market goes much lower shortly. Just playing.

To: James Strauss who wrote (41560)	2/27/2000 11:51:00 PM
From: pater tenebrarum	Read Replies (3) \| Respond to of 99985

James, <<The economy is too strong for a recession right now... The technology sector now dominates our economy... >> well where did you get that impression? technology dominates the S&P and Nasdaq, not the economy. it accounts for 5,7% of GDP. the rest is unfortunately still what's known now as the 'old' economy. granted, technology is the fastest growing sector of the economy. but to say it dominates is stretching things a lot. that's WS hype. as for the possibility of a recession, allow me to point out that the economy seems to be overheating, in a crack-up boom induced by massive Fed credit creation. in such a state the economy can (note i'm not saying must) collapse into a recession very quickly, namely at the point where the accumulated debt burden by households and corporations (both now at record highs, both absolute and relative to income as well as GDP) reaches a natural growth limit, or alternatively at the point where the Central Bank begins to clamp down on further credit creation (the Fed's stated goal now if i interpret Greenspans remarks correctly). previous crack-up booms (a term used in Austrian economics) have all ended rather abruptly,usually to the vast surprise of the experts (economists). the stock market will sense the end of the boom in advance...although it doesn't always get it right. if the market is wrong about the boom ending, it usually recovers very quickly (see 1998). if not, well look at Japan and the Nikkei. regards, hb