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

To: flatsville who wrote (61532)	10/28/2000 12:19:09 PM
From: KymarFye	Read Replies (2) \| Respond to of 99985

Dark Cloud Cover? Not according to my main textbook -JAPANESE CANDLESTICK CHARTING TECHNIQUES, Nison - nor in other references. Though I do agree that there are visual and other similarities between recent action and late May (gappy, rounding volatility searching for bottom/ consolidation after dramatic downturn), I agree with flatsville that the last two days don't fit the supposed pattern. Also, according to Nison, "dark cloud cover" is a top reversal pattern, which wouldn't apply either to Thu-Fri or to May 25-6, in my opinion. With reference to the intermediate trend as seen on the daily charts, I think we'd be looking for one of the following: (a) Confirmation of the bullish bottom reversals indicated by Wednesday-Thursday's harami verging on harami cross (long black candle followed by white hammer whose small real body is contained within previous day) or by the doji followed by bullish engulfing pattern on 10/11-13, (b) A bearish continuation pattern of some kind clearly violating the support offered by the aforementioned reversal patterns (particularly the lower shadows of the respective dojis/hammers), or (c) Further deliberation, especially if whatever upward movement is going to turn out to be relatively weak. On this note, Friday qualifies, in my opinion, as a "spinning top" suggesting further deliberation or indecision. The bearish movement from open to close cancels out the bullishness of the day's meager gain, and the entirety is contained within Wed's action. The overall result fails either to confirm or contradict the potentially bullish implications of Wednesday-Thursday (and earlier). The weekly charts of the COMPX also suggest bottom reversal, though, in closing slightly lower, last week introduces a potentially worrisome note. Obviously, it would be more worrisome if, in addition to closing lower for the week, the index had plunged below the absolute lows signaled the previous two weeks. On the bullish side, the action appears to have re-confirmed the bottom traced by the previous two weeks' lower shadows, and thusfar seems to indicate deliberation/continuation rather than violation and breakdown. I think it's also worth noting that most of the main action the last three days took place within the gap/window created 10/18-19. It's almost identical to the range established by the long-legged doji of 10/9 which, though violated by immediately subsequent downward action, can in retrospect be counted as having correctly signaled the slowing of the long post-Labor Day power-slide. A breakout up (more likely, IMO) or down (still possible) could easily come from this level. One last note: I acknowledge this is all subjective, and I suspect my own qualifiedly bullish reading of the action is influenced by seasonal expectations - tradition of Q4 rallies, plus the end of MF tax-loss selling; a sense that elements of uncertainty (ME, Pres. elections) are easing somewhat; the positive signal from the Dow; and wishful thinking (my friends tend to be b&h long-termers, and I still find trading long in an uptrend a lot easier than trading short in a downtrend). Strong productivity numbers would help, but rather untoward inflation numbers didn't cause the market to roll over despite ample opportunity and invitation (to the contrary). I think the odds still favor a moderate Q4 rally in the Nasdaq, though everyone knows that one or more big bad EVENTS (or big good ones) could force us to re-think everything.