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

To: William who wrote (81477)	8/19/2001 2:03:56 PM
From: KymarFye	Respond to of 99985

Regardless of how you choose to draft the patterns, the result certainly looks to me like a breakdown. High volume would add confirmation, but is generally less critical validation for down moves than for up moves. I agree also that the wedge, or potential wedge, remains intact, as do some last gasp support levels (e.g., the 4-3 to 4-10 double gaps on the NDX, almost bullseyed on close). My own favorite indicators do now show both the NDX and COMPX as very oversold, at or near a bottom for this move, unless (big unless) we're entering some down-spiral parallel to the Winter crash, and we've pretty much fulfilled reasonable measuring implications for the almost-forgotten head-and-shoulders breakdown from the May top. Unfortunately for those eager to play a wedge breakout from the long side, a "false breakdown" scenario seems like a more immediate concern right now than some future successful upward thrust. Though a bounce beginning tomorrow may tend to confirm the wedge formation, betoken a return to narrow-range rambling, and even hold open the possibility of an early recovery, it may also be worth keeping in mind that a valid go-long signal may not occur near here or the current upper boundary now running through the 2000s, but rather from much lower levels, perhaps even some move back through the April lows from even lower in the Fall. Widespread expectations of tax-loss selling and shoot-the-winners offsets by the funds heading into October and looking forward to possible mass redemptions may support such a scenario, which, from a trader's perspective, would look potentially much more fruitful than any nearer-term breakout, and in the meantime remain much more tradable from the short side. From the perspective of an investor or industry participant, the whole thing might look and feel more like an extended slaughter and bull roast than a "constructive" and "bullish" improvement of the market's technical condition.