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Strategies & Market Trends : Stock Attack II - A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (22099)	10/19/2001 6:13:47 AM
From: donald sew	Read Replies (1) \| Respond to of 52237

OCT 19 INDEX UPDATE ----------------------------- Short-term technical readings: DOW - lower midrange SPX - lower midrange OEX - lower midrange NAZ - lower midrange NDX - lower midrange VIX - upper midrange/borderline overbought(inverse to market) NAZ NET NEW HIGHs-LOWs = NEGATIVE 25 If the overall market was to continue straight down, I would get CLASS 1 BUY signals in 2-3 days, approximately. For all the major indices, mentioned above, some sort of RISING FLAG or WEDGE can be drawn on all of them. Rising flags/wedges normally breaks to the downside. Normally, is not 100%. From different sources I have heard the figure of around 70%, concerning the chances of rising flags/wedges breaking to the downside. I have never done the analysis myself, but from my experience it appears that figure seems reasonable. The RISING FLAGs/WEDGES on all of the major indices have recently been broken to the downside to some degree. Since I dont have charting abilities, here are the coordinates for the RISING FLAGS on the DOW and NDX: DOW UPPER TRENDLINE - highs of 9/24, 9/25, 10/5, 11/11 (one day overshoo on 10/3) LOWER TRENDLINE - lows of 9/21, 10/10, 10/15, 10/16 NDX UPPER TRENDLINE - highs of 9/25, 10/4, 10/17 LOWER TRENDLINE - lows of 10/3, 10/10, 10/17 During the developements of those rising flags/wedges the volume has been lessening, which supports the possibility of a legitimate pattern. The DOW broke the lower trendline of its rising flag 2 days ago. Today the NDX broke below the lower trendline of its rising flag, but was able to closed at the lower trendline. If the NDX cannot break back above that lower trendline with some conviction very soon, I would consider that as a negative hint. The NAZ NET NEW HIGHs-LOWs declined slightly into negative territory; however the NAZ/NDX were slightly up. That is not a great hint of a significant rally to follow immediately. Also the NAZ ADVANCE/DELINEs were in favor of the decliners, which also does not support a strong position right now. They can change at anytime, but for now the market internals are giving a slight hint towards weakness. Next week is the week after expiration which is commonly a weaker period for the market. We have a possible 3-DAY PATTERN set-up in all the major indices (down-flat-down), where THUR(DAY-2) was flat. I realise that I mentioned previously that I consider flat in the DOW to be +/-50 points, and the DOW closed down 69. After looking at THUR's candle in relation to WED's candle(DAY-1), it is a small body so I would consider it flat for this purpose of the 3-DAY PATTERN. Please also keep in mind that today is expiration day, which could also skew things in some manner. In light of the RISING FLAGs/WEDGEs and yesterday's BIG BLACK CANDLE(NAZ/NDX) with high volume, I feel that there is some more downside before a short-term trough/reversal upwards. Im not saying that it will go straight down from here, since we could still see another up-oscillation, but overall the short-term trend(1-5 days) is still down and should remain intact unless WED's intraday's highs are broken to the upside. Not that I normally post my option trades, but I have been asked by some to update my trades on my QQQ leaps to understand the strategy. Yesterday, I bought back the OCT 32's calls for 1.20, which I originally sold for 2.35, so I netted 1.15. I then sold the NOV 30's for 4.10. My original cost for the JAN 04 QQQ leaps were 9.50, so with the closing of the OCT 32 position I reduced my cost basis to 8.35, which could also be considered a 12% profit on my orignal capital outlay of 9.50. Although I have done this strategy in the past, Im just starting to get back into this groove. LEE has much more experience in selling calls against leaps, and I actually have to thank him for getting back into this strategy. I am still strictly short(USPIX/short-NDX) in my personal mutual fund account, with no hedge, and with about 93% cash(mutual fund/IRA portion of my portfolio).