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To: Les H who wrote (571)	8/28/2001 6:30:04 PM
From: Les H	Respond to of 29596

What to expect now. August 27, 2001. Ord. On August 21, the S&P broke to a new low and the volume increased confirming the break. On August 22 in candlestick charting on the September S&P a bullish "Midpoint Harami Line" appeared. This pattern set the stage for a bounce. The bounce appeared Friday taking the S&P above the previous swing high of August 21 on increased volume. Because the S&P traded above a previous high on increased volume, the downtrend may have ended at the August 22 lows. This whole bottoming process may have been a bullish "Shake Out". Near 80% of the time, the lows of the "Shake Out" are tested. The test should be on lighter volume and should not take out the "Shake Out" low. This re-test process lies in front of us. Today in candlestick charting on the September S&P a "High Price Harami" appeared which implies consolidation. If volume is light and hits a higher low, than the decline form the August 2 high has ended (and possible from the May 22 high). If however, the volume on the pull back is near equal or heavier than the rally up to current level (volume on rally was 1.03 billion shares), a bearish signal will be generated. The "5 day ARMS" closed today at 4.86, which is neutral and not giving us a clue for the bulls or bears. The "Percent Volume" indicator closed at .516 and is near overbought. The expected pull back should answer the questions. We think the market may be in the beginning stages of a base building process. Flat for the moment. The NDX trend is down. On August 22 commentary, we said," For short term, a trading range may develop and a test of the recent breakout may occur. To test the break out area a rally up to the 1580 is needed. If this area is tested and volume shrinks significantly, a potential sell signal may be triggered at the 1580 level. We will watch the 1580 area for a low volume test." Friday and today we tested the 1580 area and did rally past that area and volume was light. It appears on a 15 minute chart that an Elliott 5 count wave formed off the last low. The Elliott wave count has potential bullish ramifications and the volume has bearish ramifications. We are flat for now. Gold for short term is in a minor downtrend. This down trend may be near an end. 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