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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Nancy who wrote (411)	2/17/2001 11:17:44 AM
From: Paul Shread	Read Replies (3) \| Respond to of 52237

Interesting commentary from Ed Downs at SignalWatch: "Clearly, the NASDAQ did not go higher after gapping up yesterday. Today's behavior was really weird. How many times have you seen a chart with a one day reversal, coming off the lows? It just never happens. The power of sudden news entering the market cannot be underestimated. Now, we are sitting just above our belwether short zone, at support of 2,400. ** If we break it, I think we are going Lower. Oddly, we have good signs of an upper resistance at 2,450. Early Longs could be called for if we cross that level - but only if you can watch and exit on a move through it the other way. The OEX clearly dropped through 685, making us short intraday at the Open. On that index, we are going to use 678 as our new resistance, or "fulcrum" level. "In Summary: "In the medium term, this market is just plain nuts. As I said above, I've never seen a market coming off lows, break a trendline on a gap and then turn right around the next day, with a bigger gap, to go back to the lows. Now, we are going to have to wait and see what new information enters the charts for a couple of days. I still feel going Long above 10,850 is prudent, and would consider cautious Longs above 2,450 on the NASDAQ. If we break 10,725 (Dow) or 2,400 (NASDAQ), the market is likely trading lower before it rebounds." My own add to this is that we have two weak tests of the 1990 COMPX trendline and a new trendline forming off the January lows (at about 2402 on Tuesday), so we have some pretty strong support around 2400. We now need to turn higher, however, and create some "open water" above that 1990 trendline. We have never spent more than three months sitting on that 1990 trendline, so I'd like to see us turn up for good within the next month or so. We were looking okay Friday until Bush bombed Iraq, so was it just a short-term piercing of support on the Dow and S&P? We'll know next week... The interesting psychological turn that came on Friday was that the market decided that things aren't going to rebound in the second half, as everyone had been betting. Not sure what that means, except that the market prices in events six months ahead of time; that could mean we're range bound for some time to come, or it could be the beginning of capitulation. Given those aggressive rate cuts in January and the strong support at 2400 COMPX, I'll choose what's behind door #1 and settle for a trading range, BWDIK. The more I think about yesterday's economic data - the Michigan consumer sentiment and industrial production - the more I think the Fed now has to cut intermeeting. I think AG was trying to talk the economy out of a recession last week, and he just wound up looking as out of touch as he did in December. If consumer sentiment is as important as he says, he has to cut rates further. All of the above with a big BWDIK.

To: Nancy who wrote (411)	2/17/2001 4:26:50 PM
From: StockOperator	Read Replies (3) \| Respond to of 52237

The price action this week is confirmation for what I've been saying all along "prices will change violently but will quickly lose steam when trying to push higher." The downward forces that have been pushing prices lower will keep tech stocks from running up through the first quarter of the year. Sorry if I sound so repetitive. But in this case the charts are so clear cut, the patterns so obvious, that I feel 99.9% confident in repeating this statement. Having this frame of reference has prevented me from being swept up in the mid-week frenzy caused by some premature call by an unknown sox analyst. Especially when the "visibility" going forward even by the companies themselves is murky at best. Knowing that that brick wall is there, also offers me the added advantage of analyzing strong moves in prices for signs of distribution by the smart money. That's right, if stocks are not going higher anytime soon, then what are we really seeing when we see stocks move like they did midweek - ACCUMULATION or DISTRIBUTION of shares? A number of stocks made new lows by Fridays close even after all the short term excitement. Look at the daily action in ADCT. This is a stock that I pointed out in my last post that would be under significant pressure. The stock held strong even giving the appearance of a possible breakout in prices. Friday gave us the true direction for prices. That pressure will continue this week as we head into their earnings announcement. Same thing applies to JNPR. This stock could get another $25 haircut by month end if that support doesn't hold. To me it's all about one thing, can these companies hold that support? SUNW couldn't do this week, the stock hit a new low. A breakdown of support implies a completely new set of ramifications for everything that relates to the markets and our economy. Needless to say SUNW needs to make an abrupt about face, if not, you have to seriously question any tech stocks ability to do differently. So the pressure will continue. JNPR, CSCO, HAND, ADCT, ARBA, PAYX and MOT are just a handful of stocks facing immediate pressure this week. Unlike two years ago, my comments today have been related to the tech sector or COMPX. I have left the other indices alone simply because the market has proven to us in the past that they can move independent of one another. But I did want to comment that I believe the DOW over the next week or so will make a more significant push through the 11,000 mark. Even after the damage on Friday, prices should push higher this coming week. Despite the overall diamond formation of the past year and a half the last couple of months have set us up for a very bullish formation overall. I believe this break will happen soon. What happens after this push will be my main concern. Will prices quickly crater? More importantly, does this push imply that these tech stocks are close to a bottom? Based on some of the patterns that I'm seeing my immediate answer to that is no. But something to keep a eye out for. Besides the DOW, the Transports have a very bullish pattern and they are already three months into a major breakout. So there are some very conflicting signals. Why should now be any different. Regards, SO