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Strategies & Market Trends : Guidance and Visibility -- Ignore unavailable to you. Want to Upgrade?

To: SusieQ1065 who wrote (65221)	8/5/2002 9:16:22 PM
From: SusieQ1065	Read Replies (1) \| Respond to of 208838

Jim Brown 8/5/02, 18:34:21 Swing Trade Game Plan - Up, Down or Sideways - Maybe all three! My outlook for Tuesday is mixed. Using the OEX as our proxy for the broader market we are poised to fall to 400 if the current support range at 417-422 fails. The leading indicator for this move would be the Dow, which closed at 8039 just 30 points below its last intraday support at 8069 before retesting next support at 7875. With Dow threatening to continue downward it puts the support of the OEX/SPX in danger. Very rarely do the broader indexes gain ground when the Dow is crashing. It should not work that way but it does. Tuesday could see several scenarios. With the VIX at 49.31 and the TRIN at 2.44 there are quite a few traders itching to buy this dip despite the strong possibility of a continued downward move. I have received about a dozen emails already tonight pointing out the high VIX as the reason they bought the close or plan to go long tomorrow. I pointed out in my Swing Trade wrap that we hit much higher levels than that two weeks ago on much better economic conditions. Scenario one would be a bounce at the open to resistance at OEX 425 or even 430 before rolling over again. Considering the strong negative internals on the NYSE today, (10:1) down volume over up volume, there were not many buyers using the dip as an entry point. There is resistance above us at every five-point increment, 425, 430, 435, 440. Support below us is weaker with a possible pause at 412-413 and a more significant support at 400-403. In English it will be much harder to gain significant ground than it will to go into freefall to 400. If you are not currently in the open SHORT signal from OEX 420 then any bounce those upper resistance levels and subsequent failure would represent another entry point. The bottom line is my initial downside target of OEX 400. A) The most likely positive scenario would be a bounce at the open and failure at 425 or 430. B) The next most likely negative scenario would be an acceleration of the closing drop which increases the depth of oversold and produces a reactionary intraday bounce. This bounce would likely occur at OEX 412-413/Dow 7875. C) The least likely scenario would be a flat open and slow bleed. The volatility is picking up again and after a -260 point drop today nothing is going to happen slow. Market View Chart: Link Game Plan: Tonight will be easy. We are SHORT the broader market from OEX 420. If you are currently in this signal there are only a couple things you need to watch. We are going to change the stop loss to OEX 423 if we see a strong open brewing. The intent will be to re-enter the signal at a higher resistance point around 430-435 if possible. I view this as the least likely possibility. If the market opens down then there is a speed bump at 412-413 and we will tighten the stop around that area in case it produces a bounce. The target is OEX 400-403 but realize that this will represent a severely oversold condition and anything under 412 could produce an explosive rebound. Game Plan Chart: Link If you are not currently in the open SHORT signal then I would be looking to get short on any bounce. OEX 420, 425, 430, 430 all represent intraday resistance and good entry points on any bounce FAILURE. Because we are very oversold I would hesitate to buy the bounce while moving up and wait for the downtrend to resume. My initial target for Tuesday is OEX 400-403. That may not be the eventual low but should produce an oversold bounce as traders anticipate a double bottom.