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To: Les H who wrote (2296)	7/13/2002 9:20:22 PM
From: Les H	Read Replies (1) \| Respond to of 29594

BigTrends.com Weekly Market Outlook An Important Switch from Bearish to Bullish _________________________________________________________________ July 13, 2002 NASDAQ COMMENTARY The market plotted a Turtle Soup +1 (TS+1) buy setup Thursday. This is certainly a bullish phenomenon, particularly given the strongly positive momentum divergences we’ve mentioned were looking to push the market higher. In fact, Thursday also printed what should be the final leg lower in our momentum divergence. Momentum turned higher at Thursday’s close, which should in and of itself continue to support the market for a recovery move higher. Although these are certainly bullish indications, we do need to see the market reclaim the weakest of all key exponential moving averages (EMA’s) in the 5-day &10-day EMA’s from 1380-1400. The market proved unable to do this at Friday’s close. Additionally, we’ll look for price technical confirmation of a continuation move higher in the form of reclamation of the 1420-1450 zone, as we mentioned earlier in the week. This occurrence will likely shift the bias to the upside for a move up to the 1500-1550 zone. As a result, we are moderately bullish the market above the 1330-1350-level for a move to 1500-1550. If the Nasdaq Composite moves below 1330, the upside is negated. Looking at the weekly chart, we see the market reversed last week’s bullish tail reversal to close lower. Yet as long as the market continues to hold above the lows of last week, we’ll continue to expect a bottom may be printed and at least a move back to the key 10-week EMA. OEX COMMENTARY As for the S&P 100 Index (OEX), it reached our target level of 450 on the downside Thursday. We mentioned taking out 470 on the downside would bring about a target of 450, which we hit around midday. The OEX has bounced impressively off this key level, with Thursday’s bullish tail print to close at the high of the day and above the open. Additionally, the positive momentum divergences we expected to push the market higher have played a key role in supporting the market around 450-455. However, unlike the Nasdaq Composite, the OEX has yet to see its momentum turn higher on this latest down move. Therefore, there’s no “official” indication this latest leg lower is over just yet. Additionally, the Nasdaq Composite has plotted a head & shoulder (H&S) setup suggesting an upside bias, while the OEX’s negative directional movement is simply bouncing along resistance, showing a more sideways pattern for now. However, given the price performance of the market, we went short-term bullish the OEX following the successful test of the 450-455-zone. Therefore, this becomes our stop zone, while our first target is the 475-480 level. A confirmation of the upside bias will come with a higher reading in momentum and a the reclamation of our initial target of 475-480. Above these levels we are targeting 500, then 520. As for the VIX, the index reversed course following trade into the key 40-45-zone. We were looking for any reversal to close below the open from within this band to signify a bullish opportunity. As a result, once this became clear we went bullish based on this indicator Thursday. The 40 level has historically marked trading bottoms even in the tough markets of the last 2-1/2 years. Ideally we'd like to see the VIX stay under the 40-41 zone, as a move back over 41 could imply one more fear spike and one more downturn for stocks. But for now, a VIX under 41 keeps an upside bias for equities. If we switch over and take a look at the weekly chart of the OEX, we notice this index has plotted a low-level outside-bar reversal to close near the low and below the low of the prior week. Therefore, from a weekly perspective this is typically a bearish setup. However, this reversal certainly has the possibility of being reversed, which would then lead to an impressively bullish setup from the weekly perspective. For now we must await this coming week’s trading. On the liquidity front, AMG Data estimated that all equity funds had outflows of $3.2 billion during the week ended July 10, compared with outflows of $4.0 billion during the prior week. Here are the week's closing numbers: NASDAQ 1373.55 – 74.81 –5.17% SP100 458.92 – 33.74 –6.85% SP500 921.40 – 67.65 –6.84% DOW 8684.53 – 695.00 –7.41% For the year the Dow is in the minus column by (13.34%), while the Nasdaq Composite is in the red by (29.58%). Meanwhile, the S&P 100 and S&P 500 have posted losses of (21.46%) and (19.74%), respectively. The Bottom Line: The Nasdaq tested the absolute swing low of late in the 1330-1340-zone and the OEX tested the 450-455-zone. Both markets proved able to bounce given the positively diverging momentum. Additionally, a TS+1 Buy Setup was triggered in tech land. Therefore, given these bullish indications of a momentum and price technical perspective, we went back to bullish the market Thursday. Stops are to come below the key aforementioned levels.