Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : NetCurrents NTCS -- Ignore unavailable to you. Want to Upgrade?

To: Christopher who wrote (5829)	2/26/2001 4:38:36 AM
From: Michael Watkins	Respond to of 8925

A quick look at the COMPX and some discussions on volume and breadth: Message 15410098 First, breadth was negative on the COMPX (21-17) and volume was light You'll possibly need special Squint-O-Vision goggles for this one, but wanted to show some data from spring last year. ottographs.com As you can see, breadth was negative and volume lower in the case of the May 24 2000 swing low, yet a 1000 point rally ensued. I would argue that retests of an important low might frequently happen on lower volume, as I'm certain that some down moves end simply due to a drying up of selling (for whatever reason). At retests all players are being more cautious, knowing that outcomes are being decided. If players are cautious, then lower volumes would be expected, thus it doesn't surprise me to see lower volumes form part of the test/pattern. The second is more of a question: given that the SPX/OEX/COMPX/NDX only made new intraday lows by 2-5% or so, and closed back near the intraday lows from December/January, is this close enough to qualify as a retest? With the caveat that this rally could still fail before it ever takes out any meaningful levels to the upside, of course. I don't look for a fixed percentage, only that price moves very quickly - ideally the next day - back up into the prior trading range. I've seen many "double bottom" tests form on tiny, marginal, new lows being set. Back to the volume comment made earlier, this makes sense to me as if the conviction of sellers is dropping, buyers, short covering, etc will quickly overwhelm the selling pressure that remains and this may well support a thrust back up to the trading range. The confirmation of the test will happen if Friday's highs are taken out; and if that happens, I'd certainly like to see Monday's (Feb 26) daily high taken out quickly too. If that plays out, then as you say we will have to continue to be wary of any retracements within the trading range, since they may well turn into a solid move down to yet new lows. Its exactly that kind of diabolical 'lull people into complacency' and die move that seems most diabolical and therefore likely to happen.