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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (8588)	5/28/2000 1:52:00 PM
From: Dan Duchardt	Read Replies (2) \| Respond to of 18137

KM, Read several messages on that thread you linked. Found the following link in on of them. An interesting perspective from a fund manager that speaks to the longer term view of the Nasdaq. ipsfunds.com Besides a look at the weekly Nasdaq chart mentioned by Alan, I've been looking at other long term views I thought I would pass along, since the conversation of late seems to show some interest in that direction. DJIA (The Dow): On a weekly chart there is a pattern I've recently become aware of (no expert here) called a fork (Andrew's Pitchfork). The fork consists of a "handle" that begins at a prior turning point and then bisects the line from the more recent high to low, continuing to the present time. The "tines" of the fork are lines parallel to the handle originating at the high and low that form the bisected line. For DJIA, the fork can begin at the low on either Oct99 or Sep98, and the bisecting point is at 10735 on 2/9/00. Both starting points give nearly the same fork. Friday the Dow touched the lower tine of the fork before rising into the close. The rationale for the fork is that the handle represents the average trend rate, and that following the last deep excursion that rate should persist. In other words, for DJIA this lower tine is viewed as a support area for the long term trend to continue. Obviously, from this point of view we are at a critical point. If the tine holds, we could see nice bounce, with the most significant resistance coming from the upper boundary of the triangle formed by the recent highs in January and April, currently around 11250. If it fails we could easily retest the prior low around 9730. S&P 500: Every month I update a monthly chart of the S&P going back longer than some of you have been alive. On a log scale I have a 20 period moving average. The only sustained period where the S&P was below this 20ma was during the big bear of 1973-1974. The only penetrations below the 20ma in the last 15 years were in 1987, where it then made several touches and finally broke above in Jan89, then fell below for a few months again in late 1990. In early 1995 the S&P moved well above the 20ma and stayed there, eventually creating a distinct change in the slope of the average that still persists. During these last 5 years the 20ma has been solid support for the S&P, with a near approach in summer of 1996 and touches in Aug98 and Oct99. In February we came close to a touch then moved higher. Right now we are very close to another touch. Closing at the uptrend line from the low in Oct99 to the low on April 14, touched again last week on May 24 will just about do it. So again we may be at a significant support level. I'm making no predictions about which way things will go, but I think these longer term views of Nasdaq mentioned by others, and the DJIA and the S&P 500 suggest that so far we are seeing a relatively "normal" correction. I still think the big institutions determine the direction of the market, so hearing a Fund Manager now talking in terms of buying opportunities gives me some reason to think we may turn it around soon. Dan