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

To: bobby beara who wrote (71660)	3/10/2001 12:33:22 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 99985

Bobby, what do you make of the following divergence, on December 21st, when we hit the 2288 on the Naz we had 950 new lows or so, on January 3rd, hitting a new low of 2250 resulted only in 450, and here on March 9th, hitting another new low of 2042, we have only 200 new lows? That kind of divergence might indicate that future declines in the next few months will not go much lower. I say "might" because there are many other indicators that still require more pessimism. By the way, if you want to play the long side, with expected increased bankruptcies, you may want to consider EPIQ, the more bankruptcies out there, the better they do (g). Zeev

To: bobby beara who wrote (71660)	3/10/2001 1:52:09 PM
From: KymarFye	Read Replies (1) \| Respond to of 99985

Agree that the odds seem to favor substantial further downside on the Nasdaq. To review: The Nasdaq ended the week at a brand new two-year low, having barely held minor intermediate support along the the downtrendline from end of January (the line that the two pseudo-rallies violated), within around 20 points of critical long-term support (pre-'98 crash highs). Daily, weekly, and monthly charts all show strong continued downward momentum - with the daily chart adding a new island reversal (not usually a good thing unless you're very short) into the mix. Below 2020, 2000 offers a big neon market number, but such numbers have lately been functioning as much as selling triggers - vista points on the journey into the abyss - as support. Critical support below 2000 would be ca. 1943, below that a set of support levels roughly separated by 100 pts. or so on the way to the middle 1000s. So, it adds up to a Weekend of Doom, but it may be worth remembering how a similar scenario (including a gap down ever-more-oversold chart pattern with no apparent sign of relief) unfolded back in mid-April (back when 3000 seemed to many like an ungodly disaster): a Friday plunge (4-14) followed by a Monday morning (4-17) public-throws-in-the-towel gap down, followed by a massive reversal. Such reversals are not uncommon in bear markets, as we have seen repeatedly in recent months - and they can be highly tradable. At the moment, such a scenario looks like wild optimism, but the intersection of long-term horizontal ('98) and trend support (90s Nasdaq trendline), the nearness of the next Fed meeting as well as of options expiry might increase what today looks like the small probability of such a sequence of events. Even if an up-move of that sort transpires, however, recent countertrend rallies have flattened out well below important resistance levels - additional evidence (as if any was needed) of the strength of the bear trend. If a rally off, say, 2020 or 2000 materializes, and breaks above Friday's low, then it still has the previous low (2071), the bottom of the new gap (2124), and other interference to 2200, before a test of critical overhead resistance now at 2250 could come into range. In a move to the sub-2000s, you could ratchet all those other levels down. For the Bobby Beara Sentimental Collection, there was another bearish front page LA TIMES article - below-the-fold, unfortunately - this one about tech stocks looking to go from "bad to worse." The Fox News Channel Bulls & Bears show had analysts laughing grimly (except for the permabear) about YHOO in the single digits, ICGE disappearing, the Nasdaq at 1500 - 2000 a year from now, and AMAT possibly being buyable in the teens (bear) or twenties (bull). There seemed to be a rough consensus that getting the Nasdaq down to 1600 would be easy.