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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (19744)	10/6/2002 7:10:22 AM
From: Arik T.G.	Read Replies (2) \| Respond to of 36161

Isopatch, I was obviously wrong, as a new low was created on Friday by Naz/NDX. So ST trend is down, and the IT signal I got was negated as well. It is common that if a diagonal pattern (what I saw last week) is broken it produces a spike with the direction of the trend. Nevertheless, it seems to me that the IT trend in the Naz is very ripe and this coming week could see an important low. This is supported by many converging indicators, including some strong probability TA work not my own, but one which I give much credit. Among the supporting evidence: - Seasonal factors (Nov.- April is the statistically stronger period) - market advancing towards IT extreme oversold region. - Accumulating TA tidbits in favor of IT reversal like lower lows in the Naz created with higher lows on the Naz RSI. Roadmap for this week: Either the diagonal pattern is extending a bit more, and we will see another marginal lower low in the Naz, or it was broken and we're going to see a small spike (capitulation). I tend to choose capitulation that will bring the market to extreme ST oversold condition to end this IT trend. This means another 2 strong down days and violent reversal mid week (Tuesday - Thursday). OR we could drag down and continue the zigzag motion lower to extend the ending diagonal pattern for another week, with 2-3 intraday runups that are revered down the next day until one succeeds in making a ST higher high to reverse the ST and IT trend up. This way the reversal should occur on Friday or Monday. The latter pattern could even end the WHOLE bear market in the Naz, creating THE low, but I doubt this is the case. Just mentioning the TA possibility. Also FA (FWIW) for the first time in 5 years can call the Naz prices reasonable. I'm not saying MSFT INTC and CSCO are cheap now, just that the unreasonable prices of 1998-2001 have come back to a level you can ARGUE about. You have CHKP, a leader and a cash machine that crosses its Ts and dots its Is, trading at p/e of 13 and around 10 times cashflow from operations. CSCO is trading at an estimated p/e of 17 and also 10 times cashflow from operations, but if you deduct from its $69B market cap the $13B they have in cash and near cash you get a p/e of 14 and only 8 times cashflow from operations. One should have less to worry now about inflation in quantity of stock by the notorious employee option plans since most of the options are out of the money by now and the amount of cash needed for the buy back to neutralize the effect of the ones left is MUCH smaller now. Ha ha. Gold- We had a close over 326 a week ago and prices pulled back immediately. I consider the current down move a clear counter trend but I am not sure of the size. As long as we stay over 318 on closing basis the default is this is a ST correction on the up trend. If we close below 318 then it's a bigger correction - most probably a second leg down of the big correction from the early June high. This means that if we close below 318 we will probably end up below the July low (303.5 close) targeting the 297 area. But the TA confirmation is in that this is a correction on the up trend and higher highs will follow. If we keep over the 318 support and challenge 330 again the most likely scenario is for the major trend to intensify with a series of nice up days in a row until the ST overbought conditions become extreme. ATG