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

To: Michael Watkins who wrote (48304)	4/27/2000 1:47:00 AM
From: Michael Watkins	Respond to of 99985

INDU history on Gap down days, when already at relative lows: Sept 1998, happened in the congestion period that lasted for several weeks before the market recovered. Aug 1990, gap down, a 16% drop from the previous swing high. Rallied for two weeks and continued lower. The congestion period at these relative lows continued until Jan 1991. Oct 87, not a very similar picture to the INDU today, or even the Nasdaq today, but there were 4 gap down days in the lengthy congestion period that followed the big event. Of course a ranging lengthy period of congestion followed spanning some 2+ years. Oct 1978, set up an exhaustion gap that basically defined the trading range lasging from Oct 78 to Jun 1980. 74... ugh. Well enough of this exercise. The basic conclusion I have from looking at indicies is that when they gap down it means one of two things, 80-90% of the time - the bottom is near but expect weeks or months of congestion - the bottom is no where near This was a quick and dirty study, anyone with better information please join in... EDIT: Just for fun, there's not been a gap down on a weekly chart of the INDU since 1987. The first time it happened in Oct 87 was The Big Event. The second time, the week of 12/04/87, marked the bottom in that it was a higher swing low and price never again came down there. None of the major indicies - INDU, SPX, COMPX, RUT - have had a gap down week in this correction. Yet ;) mw