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To: Gottfried who wrote (1335)	7/21/2002 11:04:48 AM
From: Return to Sender	Read Replies (1) \| Respond to of 13403

Follow the link to see the charts. A bottom could be near: Weekend Market Analysis amateur-investors.com (7/20/02) Although this was a dreadful week for the major averages specifically the Dow and S&P 500 the Contrarian Indicators are showing signs that a reversal could be nearing. The Put to Call Ratio spiked up significantly late in the week (point A) as the market sold off severely. The Volatility Index (VIX) has remained in the lower 40s and needs to be watched for a spike above the 50 level which in the past led to a major bottom such as in the Fall of 2001 (point B) and further back in the Fall of 1998 (point C). finance.yahoo.com^SPX&d=c&k=c1&c=^VIX&a=v&p=s&t=5y&l=on&z=m&q=l amateur-investors.com Finally the Bullish-Bearish Indicator shows that the Bullish Investment Advisors are throwing in the towel as the % of Bearish Investment Advisors is now higher than the % of Bullish Investment Advisors. This is a rare occurrence and has only happened twice during the past 5 years during the Fall of 2001 (point D) and back in the Fall of 1998 (point E). amateur-investors.com As mentioned above although the major averages appear to be unraveling the Contrarian Indicators are signaling that a significant reversal may be approaching. Just like a few years ago when it appeared the market was going to go up forever it eventually topped and reversed strongly to the downside. Now the exact opposite is happening as it appears the market is going to go down forever. As far as the major averages I mentioned a few weeks ago it wasn't a good sign when the Dow broke below its Neckline in association with its Head and Shoulders pattern. Unfortunately my fears have been realized as the Dow has now dropped back to its September 2001 low near 8000 (point F). The big question now is will the Dow be able to find support near the 8000 level or will it drop back to its next level of support near the 1998 low around 7500? Meanwhile if your looking for some optimism there is the possibility that the Dow may be forming a potential Double Bottom pattern (looks like the letter "W"). Double Bottom patterns are more meaningful when the 2nd Bottom is lower than the 1st Bottom. If the Dow does drop back to the 7500 level and then bounces strongly off of it then this could end up being a positive development. On the other hand if you take a pessimistic view on things and the Dow is unable to hold support near the 7500 level then there is the possibility the Dow could fall all the way back to the 6000 level which is along its upward sloping trend line originating from the 1987 market crash (point G). The Nasdaq has been trending downward since the first of the year and has been unable to rally above its 20 Day Exponential Moving Average (EMA) since late May. From a longer term perspective the Nasdaq is exhibiting a large Head and Shoulders pattern and is at a key support level near its Neckline (point H) and upward sloping trend line (solid black line) that originates from the low in 1990. If the Nasdaq fails to hold support near its Neckline and upward sloping trend line the next area of support appears to be the 1997 low near 1200 (point I). Meanwhile if we look at things on the optimistic side the Nasdaq could be in the formative stages of developing Double Bottom pattern (looks like the letter "W") as well. If the Nasdaq did drop back to the 1200 level and then bounced strongly to the upside this would allow for the 2nd Bottom to be lower than the 1st Bottom. However on the pessimistic side if the Nasdaq fails to form a Double Bottom and doesn't find support near the 1200 level then it could eventually fall back to its 1996 low near 1000. The S&P 500 has been in a steady downtrend since mid March and hasn't been able to rally above its 20 Day EMA (blue line) since late May either. Meanwhile just like the Nasdaq the S&P 500 has been exhibiting a large Head and Shoulders pattern. This past week the S&P 500 clearly broke below its Neckline support area (point J) which wasn't a good sign. If the S&P 500 continues lower a key level to watch for a potential bottom is where the S&P 500's upward sloping trend line originating from the 1987 crash (red line) intersects with the 1997 low (black line) in the 725-750 range. I know things look ugly right now but as talked about in the beginning the Contrarian Indicators are giving us signals that a significant reversal maybe getting close. Watch the VIX carefully next week for a spike above the 50 level if the market continues lower. At this point I know its hard to keep interest in the market however keep looking for those stocks that have been holding up well and forming a favorable chart pattern such as a "Cup and Handle", "Double Bottom" and "Flat Base". Although it appears every stock has been sold off actually there are some that have been holding up well so far. Eventually the market will bottom and begin to rally so you have to be prepared for it when the time comes.