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To: Les H who wrote (962)	11/12/2001 6:58:00 PM
From: Les H	Respond to of 29596

What to expect now. November 12, 2001. Ord. On November 7 commentary, we said, "The S&P is at a make or break situation. Either the S&P hold near current levels for the next several days (which would imply a rally to 1220) or trade below yesterday low and imply a retracement down to 970." Today the December S&P traded at the November 6 low, hitting 1096 and matched the November 6 low. When a market trades at or below a previous low a change of direction in the market is about to occur. Volume at the November 8 high was big. Normally, markets that make tops on high volume are usually re-tested. We are expecting the S&P to test the November high before the downtrend begins. On the November 8 top, a bearish candlestick pattern called a "Doji" formed. "Doji" patterns are usually stiff resistance areas. We are going to look for the S&P to double top near the 1340 area before heading lower. GE is trading in a similar pattern as the S&P. If GE closed below 38.75 in the coming days, another sell signal will be generated. We are holding the GE December 35 puts. We are short the SPX. A bearish 2.42 "5 day ARMS" index reading on the Nasdaq was recorded on November 7 and is the lowest reading recorded this year. Normally the "5 day ARMS" bottoms out near 3.50 before the NDX reveres lower. This indicator has a good record for picking short-term tops in the past. At the May 22 top the "5 day ARMS" came in at 3.14. A bearish "Three Drives to a Top" pattern may be completing now. The third top may have formed on November 8. The "Three Drives to a Top" pattern usually has a double top on the third top. The NDX is making an attempt to go up and test the third top now. To have a bearish outcome, the test of the third top should occur on light volume. The volume at the third high was 2.21 billions shares. The re-test should occur on 10% or lighter volume to show less force to the upside. We are short the QQQ 37.75. The XAU is in the first part of November where the consolidation should end according to cycle work. Most gold stocks are still trend sideways for the moment. We are expecting the gold stock rally to begin near this time period. Our upside target on the XAU is still 95 minimum. marketweb.com