To: Les H who wrote (2616 ) 8/30/2002 10:56:08 AM From: Les H Read Replies (1) | Respond to A battle is raging for control of the market, and much like a real battle, control will pass to the group who gains a strategic line of battle. In the market's case, that line is the area around the July 31st tops, which coincidentally is also where the 20-day moving average currently is. If you'll recall, when the market was last approaching that area, we said we'd turn bullish -- and remain bullish -- as long as the market remained above that line. This week, $OEX and $SPX have retreated exactly to that line (Figure 1), which is at 460 for $OEX and 910 for $SPX. Who will win this battle? We don't know, of course, but we will certainly be able to tell when the market moves away from this area. It if closes below, it will be bearish (and other indicators' sell signals will be more ominous -- see below). However, if the market regains its footing here and heads higher, it will be viewed as a successful test of support. So, at the current time, we can't really tell which way it's going to go, short-term, but we certainly have a demarcation line to tell which group is in control -- once the market moves away from this area. optionstrategist.com
