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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: Rande Is who wrote (47585)	2/19/2001 11:00:11 AM
From: Kevin Shea	Read Replies (3) \| Respond to of 57584

NAZ/Dow --- TA view ------- (Rande, ~protege ) this look at the TA hopes to offer a view from the objective side in order to balance your subjective look. Hope it helps. NAZ - a look back at the spring 2000 top showed underlying bearish signals in the form of diverges in most all major indicators ( in the daily ) originating in March. The subsequent April/May bottom also was significant in so much as it also demonstrated strong diverges. The bottom diverge initiated a cycle that ended in early Sept with a breakdown from an ascending triangle. That was followed by a downward trend that followed a 3 wave cycle ( which is considered "normal") which ended by a trendline break in mid January. So, where are we now? My looks suggests that we are at the start position of a new cycle whose length should be in the order of 4 ½ - 5 ½ months. That cycle could be up, sideways, or down. To determine which, look into the signals. What we see is an oversold condition on most oscillators, increasing volume, but no real strong diverges. What we have are developing weak diverges, certainly weaker than those of spring 2000. However, these uncompleted ( apparent ) weak diverges are in the same indicators as those in the spring. We are also looking at a double bottom right here. The monthly is more neutral than not. Indicators are showing severely oversold conditions, as we sit on the down side of the secular trend. Monthly suggests that any recovery will be pressured at appox 3500. The monthly uptrend line has still not been tested and sets the potential for a test into the 2000 area and create oversold conditions similar to 1991. ( I can't get to refined data here). The most astonding thing about the chart is its correlation ( albeit lagged by many years) to the Nikkei. It may be déjà vu all over again when you compare the fall-out of the Japanese mania and apply a lessons learned imprimatur. The DOW, to my untrained eye looks "iffy" ( my sense is dangerous). Monthly we are looking at a head and shoulders formation that is sitting on top of weak indicators. ( a two year topping pattern? ) volume is extremely heavy and increasing. The H&S pattern is evolving into a triangle pattern unable to break out to the positive. Resistance at the 11200 range has resistance piercing evern with volume increase. The triangle patten is putting a squeeze on the DOW. The DOW has been in a very tight trading range between 10000 and 11200 for 2 years. The long term trend here may be offering some weak support in so much an early indicator trend appears to be ending ( `protégé will you check the willy -34 - on this?). So what I see is a mixed situation pattern analysis looks weak, indicators are neutral or supporting price, but an early indicator offers some potential positives. So what? · Well I CONFIRM that a buy and hold strategy here would NOT be prudent…. · It is interesting to see what looks like a LT topping pattern in the DOW and a ST bottom in the NAZ. Does this diverge mean anything? · The NAZ is providing better signals than the DOW but in either case my read is that the signals are generally weak. · It is likely worthwhile to examine NAZ sectors that evidence strong indicators and play within those sectors. · It is still spooky to overlay the charts on the Nikkei and lag them 12 years. · Personally, I'll be staying in the NAZ, with selective buys; working in the short term; carefully watching mutuals that I control ( and likely withdrawing to reduce exposure); tracking the DOW for a triangle indication in ST; and watching NAZ for a MACD diverge to fully develop. Anybody have opinions???