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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: J.T. who wrote (5537)	12/9/2000 7:49:23 PM
From: TraderAlan	Read Replies (2) \| Respond to of 19219

JT, Thought I'd pass along this interesting scenario. QQQ just touched the 62% retracement of the 5 wave rally between the Asia low in October, 1998 and the March, 2000 top. Trends that maintain support at this boundary remain intact. The big question is whether or not it can hold it (realistically that also includes a quick shakeout below the number). Does the correction between March and last week represent a ABC countertrend in the secular bull market? If so, the market can theoretically reestablish the prior uptrend at this point. This doesn't mean new highs any time soon but it can initiate a back and fill of the correction until it can test the old high (or eventually give up). On the chart below, I've marked in the 5 wave rally and "apparent" ABC correction. The "Testing Zone" between 70 and 80 will establish whether or not we've completed that wave set. If the move from September to last week is actually a primary down wave (ie, not a countertrend), this bounce should not be able to penetrate that zone (for EWT techies: the theory being that we're in 3rd of a 3rd downward wave and the market shouldn't be able to retrace strongly into the larger or smaller 2nd waves). The loudest signal would be a sharp gap above this number. The parallel channel lines also show a target for a final washout into the mid-50s. A bounce from there back above the 62% line should be a major cycle buying signal. hardrightedge.com BTW I'm a seat of the pants EWT type and willing to see a few wave rules broken without losing too much sleep <g>. Alan