Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: dennis michael patterson who wrote (44359)	3/29/2000 8:05:00 PM
From: John Madarasz	Respond to of 99985

Re: Technicians? How low can you go... Adding a Grain of Salt to Nasdaq Corrections By David Shabelman Staff Reporter 3/29/00 5:39 PM ET Hey CNBC! We pick on you a lot, but can you please shut up already about 10% corrections in the Nasdaq? Yes, 10% is the standard definition for a market correction. But correct us if we are wrong, but you have to throw out the book on typical things when you're dealing with an index that was up 85.6% last year and at one point this year was up more than 25%. Granted, the Nasdaq has bounced after falling 10% from its highs previously this year, and we would expect some buying if the index drops 10% as it appears to be doing this time around. But to keep harping about 10% is just plain irresponsible. There, the sermon is over. But other than 10%, how can you tell how low things will go? Technicals, my friend, technicals. Our good friend Bob Dickey, director of technical research with Dain Rauscher Wessels, said the rule of thumb he uses is the correction will be 50% of the previous upleg. So, for the Nasdaq, the numbers he is using are 2700 from October of last year to 5100 made earlier this month, or 2400 points. So, if you take 50% of 2400 you get 1200 (apologies for the simple math), then subtract that from 5100 and you come up with 3900, or a 24% correction from the highs. But don't bet on 3900 yet. Dickey also said that the Nasdaq would need to break through the 4500 level to indicate that a double top around 5000 was official and indicate a trip to at least 4000 was forthcoming. It closed down 189.21, or 3.9%, at 4644.68. And just fyi, 10% of 5100 comes in at 4590. Best Regards, JM