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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Mike M who wrote (10533)	12/4/2001 11:06:49 PM
From: puborectalis	Read Replies (1) \| Respond to of 99280

The fact that major averages are "snuggling up to" levels from which they broke down in late August-early September "is probably more indicative of real battle going on," than the issue of the moving averages, said John Bollinger, founder of BollingerBands.com in Manhattan Beach, Calif. But moving averages are "actually quite significant, primarily because people are focusing on [them] ," Bollinger said. "If we can get above those [moving] averages, investors are going to have their confidence reinforced [and] I don't think investors care if [the averages] are sloping up or down." Bollinger suggested the focus on the moving averages can become self-fulfilling but cautioned investors from overestimating the power of such data points. "They are benchmarks [of] rather than causes" of market action, he said. If an index fails to move above its moving average, or does so only marginally and then retreats, "then you have confirmation of a negative trend and you take some profits and make defensive moves," the veteran technician explained. Conversely, if an index consolidates just below its moving average, then pops through it and holds on a retest, "then you know you've seen a shift in trend and change in dynamics from where selling was the primary mission to where buying is the primary mission." Bollinger expects a "surge of volatility" in the Nasdaq and suggested its recent consolidation pattern could be a harbinger of a "pop to the upside," as today's session confirmed. However, "if we fail and roll over, we're more likely see a real tussle between the tax sellers and bargain hunters" for the remainder of December, he cautioned. Additionally, the technician observed that the Dow and S&P have "much less constructive charts" than the Comp, which brought us to one of Bollinger's long-standing observations: that for all the focus by many investors and the press on the big-cap averages and names, he still believes small- and mid-cap stocks are the best place to be invested.