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Strategies & Market Trends : MP - Market Pulse -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (396)	7/9/2001 9:10:34 PM
From: Les H	Read Replies (1) \| Respond to of 1328

What to Expect Now. July 9, 2001. Ord. The S&P broke below the previous lows of June 26 and 15 on light volume. This condition is not a valid breakout to the downside. High volume is needed on the break to confirm a breakout. However, price did break through the previous lows by a wide margin and is a bearish sign. Therefore, the price and volume studies are not giving a clear picture for the moment. The "5 day ARMS" closed today at 6.51 and is in bullish territory. The downtick reading reached minus 944 on Friday and is a bullish sign. The CBOE hit a high today of 1.03 and closed at .78 which is also a bullish sign. Therefore is appears the S&P is near a support area where the market may bounce. Since the S&P broke below the previous lows by a wide margin, the potential set up for a buy signal would carry risk. A better trade set up for a bounce is in the NDX. The NDX may be near a short term low. The NDX have not broken below the previous low set on June 20 near the 1655 area. The NDX approached that low on Friday with volume of 1.36 billions shares. The Volume at the June 20 low had 2.00 billions shares. A test of a previous low on lighter volume is a bullish sign. To proof the NDX can not head lower is to test the June 20 low of 1655 on at least a 10% decrease in volume. In other words, we like to see near 1654 being hit on volume less than 1.8 billion shares and have the market close above 1655. This condition would setup a bullish pattern called a "Spring". Normally after a "Spring" forms the market rallies vigorously. The "5 day ARMS" in the NDX reached 12.20 on Friday and is in deeply oversold levels. The closing ARMS index hit on Thursday's close at 3.52 and Friday's close at 5.69. Two days in a row over a reading of "3.00" predict exhaustion move to the downside and the end of the decline. From the June 7 high to the June 15 low the NDX rallied to a 61.8% Fibonacci retracement to the June 29 high. This condition predicts the NDX should double bottom near the June 15 low at the 1655 level. The NDX is near a short-term bottom. To proof the market can not go lower, a test of 1655 is needed with volume less than 1.8 billions shares and close above 1655. If a bullish signal is generated in the next day or two, our first upside target will be the previous high near the 1870 level. We will wait for this trade to set up. Gold for short term is in a minor downtrend. At the very latest, this downtrend could last into late August. It is worth noting that the longer the sideways trend the stronger the rally will be when it begins. This condition is called, building "Cause". The Month chart on Gold remains bullish and we are holding long the XAU. marketweb.com