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

To: Michael Watkins who wrote (67827)	1/28/2001 8:39:33 AM
From: HairBall	Read Replies (1) \| Respond to of 99985

Michael Watkins: so the wedge break on the NDX/COMPX is most interesting to me...Failure of a pattern can be useful too. Contraire to what may have been written in the past and believed by the many, "from my experience" rising wedge patterns formed in an uptrend most often portend a partial retrace of the pattern. Of course, they can be the start of a reversal, but the formation in and of itself does not forecast a reversal of trend. It must be used on concert with other technicals. IMO Regards, LG

To: Michael Watkins who wrote (67827)	1/28/2001 10:48:40 AM
From: KymarFye	Read Replies (2) \| Respond to of 99985

Michael, to my eye the COMPX doesn't look like it's done much of a wedge break. If you're indicating a wedge with a lower trendline starting 1-8 and breaking down 1-22, that's not much time to form a wedge, the volume patterns don't fit (generally strong rather than dropping off), and the breakdown would have come virtually at the apex, suggesting a weak move from a weak version of a pattern that, as patterns go, is already fairly weak. Even if it is a wedge breakdown, the drop from the 1-24 high to the 1-26 low isn't far from about normal for an average breakdown from a rising wedge. I do think that there's potentially a better wedge still being formed on the bottom side from the 1-03 low through the 1-26 low (with a slight penetration on 1-08), on the top very neatly from 12-22 to 1-24. One way to complete this wedge would include decreasing volume heading toward the Fed meeting, some upward-biased sideways action, then a sell-off on the news - to my mind a very reasonable scenario among the leading alternatives, especially after Friday's gap down reversal. In this alternative, I wouldn't necessarily expect the Compx to reach the upper trendline again, though a failure near 3000 followed by a dramatic-looking re-retracement could be one normal development - just the kind of thing to initiate a new round of bear vs. bull excitation and highly tradable volatility. This all assumes, of course, that either version of a wedge will, unlike many theoretical wedges, play out according to the predicted form.

To: Michael Watkins who wrote (67827)	1/28/2001 11:18:56 AM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

Michael, I think your analysis of KLAC is quite correct, even more ominous is the fact that the stock failed without closing the gap on the way down (September 22, the top of that gap is, I believe, around $49), that gap was on very heavy volume (close to 20 MM shares if memory serves) and that volume was not exceeded in any of the big up days recently. A similar structure (failing to fill the gap) can be seen in VECO and may other semi equip companies. The way I read these chart, like KLAC, is that we had a broad box between $40 and $65 earlier last year (topping and double top formation), then the first major box down between $30 and $45 more recently, and the bear market in that segment. I expect a third leg down in that sector's bear market to start soon, and IMTO, this third leg will not stop until the fundamental factors (namely visibility of a turn around of the economics of the sector), possibly, as exhibited bu the BTB bottoming somewhere under 1.00. This amongst many other factors is one reason I believe that this strong January rally, is no different than the June rally we had to 4300 on the Naz, and the recent (but very short) rally from the Dec. 20 low. If the slow down in the economy degrades into a full fledged recession (which somehow, the Bush/Cheney team is doing its best to assure), then the January 3rd lows might possibly be breached in the next few months (I have about six weeks for the next Naz bottom, but am not sure if it will be below the Jan 3rd low or not). Zeev