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

To: bobby beara who wrote (72661)	3/26/2001 7:24:28 PM
From: Arik T.G.	Respond to of 99985

BB, Thanks for the chart, I esp. liked the MACD part. Yeah, now everybody is talking about a bear market, and how they lost their life savings, and how manipulated is the market. Of course the hot air is not completely out of the bubble- just look at the Naz daily volume. When it dwindles down to pre 1997 level THEN the hot air will be out. The weekly chart of the Naz poses an EW riddle fast.quote.com First - the first wave from the top- It looks like a 5er, Second - The big bear rally - Did it end in July or September? I guess the answer will depend on how deep the economy is in the manure. The one clue in the weekly chart is the 5er of decreasing waves from September to December. Based on that clue I can see three possible counts : 1. The bullish count - IMO it could turn to be the "true" count only if the economy picks up before the end of Q3, and there's no major recession (yet -g-) - First wave from the top down was A, and is not a 5er. B rally ended in July, and big C from there IS a 5er, with the September local high as 2 of C, December bottom is 3 of C, and we have just completed 5 of C from the January high to last week's bottom, including the inevitable ED 5 of 5 from March 6th. On this count it's back to climbing the wall of worries and no new lows. IMO this is too Polyannish. 2. The extremely bearish count - This could be the "true" count if the big depression is still ahead - It's essentially the same as the bullish count in placing the major turning points BUT it looks at the two big down waves as 1 and 3 of A. All the difference is that we now assume that the drop from last year's Top was a 5er. This scenario calls for a flat 4 correction to the minimal Fib reaction to the 3. Then a new low that completes the A and a bigger correction B that will try but might not succeed to overlap 1 of A at 3000 and change. Then the big C that will take us all down into the abyss. Naz 500 will resemble the 89% decimation of the Dow from the '29 top. IMO this (or a variation on it) is still a classic and has a good chance to happen, but so far the economic data is not supporting a big depression. We will know more later this year, and this is the interesting part, option 3: 3. We now move the major turning point from July to September, making the bear rally of last year a nice big ABC (look where the 50 weeks MA turned back down!). The clue 5er is now extended 1 , and the January high now marks the 2. We've just completed 3 and the flat 4 will not overlap the January low of 2250 or so, and will not be long enough to crank the 50 weeks (~200 days) MA back up. Then the 5 smaller then the 3 will make a new low but not lower then the 10/98 low. By the time the market is on the runway for the next big up wave, there will be enough economic data to tell what form the recession took, and whether this is going to be a successful take off or another crash landing. This is all LT and philosophic. Shorter term I think that the current up move from the lows isn't over yet. The move from 3/6 is too EDish and the 13 DMA has traveled in the same direction for too long. Therefore IMO the current move should correct at least to the minimal Fib reaction to the leg from the Jan high. The NDX 1860 area is IMO both a magnet and a resistance, being the focal point of two Fib corrections- the big 61.8% reaction to the move from March 6th and the minimal reaction to the bigger move from Jan high. I think that's where we're headed. Note that Friday's morning high touched exactly the 38.2% reaction to the move from 3/6. IMO that was just the first leg up, and today's was the pause before the next leg to NDX 1860. We'll see how the market deals with that one, and I'm not too optimistic after the hardship it got so far from the IMO innocent 38.2% mentioned above. I've been trading mostly mini NASDAQs recently, hence the focus on the Naz. I think that the Naz and the NYA will continue to walk different ways for some time. The NYSE composite (closed 587) looks like it still got to go lower, and I'm still looking for the big H&S target at 641 to be reached rather sooner then later. Then a correction can be of more substance. Good trading ATG