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To: donald sew who wrote (31658)	12/19/1997 8:36:00 PM
From: MonsieurGonzo	Read Replies (1) \| Respond to of 58727

Donald; RE:" Gauging the Extent of Index Movements " Thanks for your INDEX UPDATE, Donald - always very useful to me. I agree with you that a near-term reversal has been indicated, and I am expecting strength in large-cap index components, including NDX.X Since I don't have a guitar ( keyboard man :-) I had to use more traditional methods to read the major index action yesterday. What we did was generate a simple line chart using daily closing prices, and drew Trend Lines and Horizontal Supports on them. On thursday, the INDU, SPX, OEX and XMI all showed a clear "Head and Shoulders" pattern and a broken UpTrend with pull-back retracement indicated by the right shoulder. The OEX index line chart is a little easier to read, as the neckline is horizontal, rather than inclined. The neckline was OEX 455. I sent the charts out to some folks via EMAIL, including my 76-year old dad, who likes to trade stocks from his home in Texas. He sent me a reply, saying that there was this old rule one could use for H&S - the extent of the fall should be roughly equal to the distance between the top of the head and the neckline. On the OEX, the top was ~472.5 and so the gauged extent was -17.5 down; 455 - 17.5 = 437.5 The OEX went down to ~437.5 and stabilized at the 440 strike level. Tom noted that this extent was roughly equal to the 200d MA, which I do not have on my console (yet). It is interesting to note that, during the Halloween Crash, where an almost identical H&S appears on the line charts of the indices - after the "panic" - the indices also roughly followed this rule, stabilizing at OEX ~432.5 after falling from a neckline at 452.5 and a head top of ~472.5 - I find this old T/A rule very interesting, indeed. Perhaps one thing that makes it easier to work with is the simple line charts of closing prices, which filter out lots of volatility. Hammers* on OEX/SPX and (yes!) NDX.X - we be going UP next. -Steve

To: donald sew who wrote (31658)	12/19/1997 11:40:00 PM
From: mozek	Read Replies (1) \| Respond to of 58727

No kidding!!! I sold the XOIs and IIXs just after the open expecting it to continue into late morning. Since I stayed up pretty late last night, I decided to sleep a little longer and slept right through the 260+ point dive <VVBG>. I'm very thankful that I didn't have to sit through that. In the last hour when it looked pretty clear that we'd have a good close, I repurchased the XOIs with a little savings. I already have a CISCO leap call spread that I uncovered today to participate in the IIX strength. I also bought a lot of DIGL which was on fire sale today. I could be wrong, but the technicals on them look OK to me, and I decided a while ago that I LOVED the fundamentals. I believe that at least some of the recent dip is due to the Cabot market letter selling them. I still think that theres a good chance of a very strong bounce in the XOI if we get a rally of any substance in the market. I'll be headed to Prague for the holidays, but I'll still check in from my WinCE machine for those INDEX UPDATEs :-) Thanks again for posting them. I hope all on the thread has an excellent holiday season. Mike

To: donald sew who wrote (31658)	12/21/1997 9:28:00 AM
From: j g cordes	Respond to of 58727

Hi Don.. gut wrenching day yes. I'm showing we're nuetral on a 180 day chart of the OEX, having just passed through the middle on stochastics with a bounce off an oversold in momentum and rsi. As Friday's selling and rebound occured in the shadow of an expiration following nearly ten days of weakness I'm simply tying a string around the whole package with a note that says ".. down leg in a horizontal channel begun in August between 472 and 438." This is the third top failure. The pattern we are forming here is commonly known triple top or rounding top__ if we go up we'll have a broadening formation (which tends to break upside or downside the range). Its expected that earnings will continue to be shy of stock valuation expectations... if we rally going into next week I'd be selling at OEX 466 area as I think OEX 427 is next support and target (might take the first week of January to get there because of "bargain hunters"). Jim