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

To: Chris who wrote (5112)	1/23/1998 1:07:00 PM
From: Robert Graham	Read Replies (2) \| Respond to of 42787

Looks like the market as defined by the DJIA is bottoming out. An intraday double bottom pattern forming in an OS condition right at its 200 day MA from what I can tell on these Internet based charts. Traders play the bounce off of critical MAs. However, the double bottom is a bit premature right now. I know some technicians here think that price patterns do not work with DJIA, but my experience has been the opposite, particularily when used with other confirming information like S&Rs and MAs for instance. Bigcharts is not too bad of a charting service, and its free. Even has sector charts. This is definitely a trading range market, and a look at the 50 and 200 day MAs,tells me the trading range is narrowing. There is allot of scalping and intraday swing playing, which is encouraged by program trading. The market according to the.street is even responding to Bill Clinton and the latest press on his indiscretions of the female nature. I will call this the "zipper effect" on the market. This tells me that the market has no leadership. So the focus is constantly shifting in the trader's attempts to find a leader for their intraday trading. Money wants a place to go, so any excuse that comes by will be taken as an opportunity. According to the.street, there has been recent interest in the box makers by institutions. A few weeks ago it appears that the fundies have taken is a sizeable amount of money and now needs to find a place for it. This is a volitile market. I would think they would move into the blue chips with perhaps a downside hedge like through the purchase of put options. What they are actually appear to be doing is purchasing call options before their entry to guard agains the price working against them as they enter with their large blocks of money. To me the funds are taking a very short term approach to the markets and also have confidence that for now the market has bottomed out. I looked at a chart on DELL at bigcharts, at it has been showing very good relative strength in relation to the market, on the heels of a significant uptrend that started when the market last bottomed and began to turn up earlier this month. This happens after some downgrades made on this industry by analysts due to the fears surrounding future earnings of companies exposed to the Asian markets. However, how much of DELLs business is from Asia? I think they will more likely benefit from the Asian problem since they would expect to purchase components at reduces prices. I did hear that they were negotiating such an arrangement with Asian suppliers. Still, it appears to me that the fundies are basing their recent decisions on the technical picture and a strategy that is based on a short term play instead of a fundamental outlook and a longer term position. Any thoughts? Bob Graham