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To: Les H who wrote (3367)	10/25/2002 11:59:48 AM
From: Les H	Respond to of 29594

Our buy signals remain in place (with one exception -- more about that later). The market had gone pretty much straight up for nearly two weeks, but it's run into a little trouble in the last couple of days especially Thursday. At this point, we view Thursday's pullback as just a natural reaction to a modest overbought situation. In fact, this could be an opportunity to get long the market on a pullback right before the seasonally bullish period occurs at October month-end. There are some obvious stop points, though, for traders -- in case things go wrong. Price action has remained bullish. $OEX broke out over the 440 level and has remained above it ever since (Figure 1). The next upside achievement would be a close above 460, and then an assault on the August highs at 490. If you follow the S&P 500, the next resistance is 900, and then the August highs are at 960. From the viewpoint of our technical indicators, it seems possible that these levels can be challenged and overcome. Of course, if you listen to the news and current fundamentals, everything seems quite dreary. We'd rather put our chips on the technical indicators and ignore the news. However, a downward penetration of the $OEX 440 level on a closing basis should be a sign to short-term traders to liquidate long positions. Even that, though, would not be a sign to short the market for -- as you can see from the chart -- the rising 20-day moving average is currently at about 425. Should $OEX fall below there, then a significantly more bearish stance would have to be adopted. For now though, we ascribe to the bullish case. optionstrategist.com