To: Peter H. Mack who wrote (8776 ) 10/18/2000 2:38:41 PM From: DJBEINO Read Replies (1) | Respond to Chart Watch : If you were on another planet and missed the early action in the Nasdaq Composite, it looks like it is just another ho hum session as the index slips slightly after posting moderate early afternoon gains. However, a 7.3% intraday reversal off the early low can hardly be considered another yawner. Although the index has been in a range trade mode for the last several hours, the aggressive nature of the turnaround and the deeply overextended short term technical condition suggest potential for further upside activity once the current correction off the high is complete. Intraday support is at 3175/65. It will take a slide all the way back through the 3120 area from current levels to inflict any damage of significance. There has been plenty of talk swirling around the marketplace today that this was the big one, the final spike down to end all the carnage. While clearly the turnaround is encouraging it is far to early to make any broad based statements about the overall condition of the market. Very short term, playing the long side makes sence while support is intact but could this really have been a day of capitulation when the market was already on the mend after just 15 minutes or so of activity? Hardly gives firms time to issue margin calls. And, from recent reports the percentage of shares bought on margin still remains at high levels despite the cut back seen over the last month. One of the first steps to improvement will be a break of the steep downtrend that has persisted since Sep 01. A downsloping trendline that encompasses this action does not even come into play until the 3400 area. If accomplished, the next step is a break of the early August low at 3521. At this point we will have neutralized the bearish bias. The Dow was hurt more significantly in early action but it has staged a similar aggressive recovery after flirting with an important chart/retrace support zone at 9650/9550. A rebound initially through 10,000 and more importantly 10,250/10,300 is needed, however, to improve the near term bias. Overall today's trading at least raises hope of a more lasting turnaround. But, like a car careening down the highway at 70 m.p.h., it typically takes time for the momentum to first stop and then build any speed in the other direction. - Jim Schroeder, Briefing.com -
