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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (5002)	1/20/1998 10:20:00 PM
From: P.Prazeres	Read Replies (1) \| Respond to of 42787

Chris , Check your email.... for the rest, here you go... Just to share a few thoughts about what happened in the market today... We are starting to get some answers.... From the January 3rd weekly newsletter <<What happens with these earnings reports will say alot about what will happen to the Nasdaq in January.ÿ If the numbers come in as expected, the Nasdaq will more than likely make a stab at 1670 or even higher.ÿ If the numbers turn out to be slightly negative, its back to the mid to lower 1500's.ÿ If they are terrible..., well let's not think about that for now. Why is it possible for the Nasdaq to "explode" from here?ÿ There is so much bad news priced into many of the tech stocks.ÿ If, by chance, earnings aren't as bad as the share prices portray them to be, then there will be alot of catching up to do.ÿ Some of the trading in the past few days suggest that some are second guessing the bad news>> Well, the numbers for the most part are exceeding estimates ... and for companies that do what Lucent did today, the "catching up" happens quickly and swiftly.ÿ Some of the electronic contract manufacturers have reported some pretty good numbers, the chip equipment makers had a good 4th quarter even with the Asian bug in full swing (Novellus on yesterday, comes to mind)... The new lows on the NYSE were 32 today, but that is only two consecutive days under 40 (last thursday had 50).ÿ More importantly today is what the market did to some of the resistance levels that were in place.ÿ The Dow's 50 day MA on Friday was 7805.34.ÿ This MA was providing resistance , especially on an intraday basis recently.ÿ Today, the Dow passed that resistance , didn't look back and closed very near the high.ÿ The 50 day MA has also turned upwards again, trendwise....a good sign looking forward. The Nasdaq's 50 day MA was 1574.31 on Friday.ÿ It also broke through that and closed quite a bit above that.ÿ However, it's 50 day MA is still in a down trend (well almost flattening)heading torwards the 200 day MA. Tomorrow, we may get a hint whether or not the Nasdaq heads torwards the upper 1600's.ÿ If the 50 day MA provides support and especially if the nasdaq closes above that support for some time, then the 50 day MA trend will turn up and the danger of it crossing the 200 day MA begins to get eliminated.ÿ In other words, the next week or so are very important for this index...it can not afford to linger on as it has in the past few months...for the signal given by those two moving averages crossing is very, very, very negative.ÿ As of Friday, the difference between the two MA's was only 53 points.ÿ With continuous closings above the 50 day MA, that difference will increase. Hope that makes sense to all of you....I wanted to let you know at what point in the correction we seem to be in.ÿ If the old resistance levels provide support, we could see a pretty good snap up due to the amount of short covering that could occur.ÿ Of course, if the market does head torwards new highs (as it may on this run), the next task will be to see if it is sustainable or if it is a setup for yet another correction....but that's not for discussion right now. Just some thoughts....enjoy the evening. Paulo